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Renewable energy takes 5% of Asian Development Bank funding

Renewable energy projects receive 5% of the financial assistance provided from 2001 to 2008.

Power transmission was the largest recipient of assistance from the Asian Development Bank (ADB) over the period, with US$2.8 billion for 31 projects representing 36% of the US$7.8bn given in total funding.

Thermal power generation was next at 16%, power sector reform 12%, power distribution 10%, large hydro generation 8%, energy efficiency improvement 7% and gas infrastructure development received 6% of the funds. The five percent for renewable energy was ahead of capacity building at one percent, from a total of 127 approved projects.

“Globalisation and technological advancements have created immense opportunities for wealth creation in all parts of the world,” notes ‘Greenhouse Gas Implications of ADB's Energy Sector Operations,’ an independent evaluation produced for the regional financing institution.

“Billions in Asia are now able to contribute to the global economy and, with increased income levels and improved living conditions, millions have risen above poverty levels. Concurrently, production of new goods and services, as well as rising household incomes, have started pushing up energy demand growth rates in Asia, and the developing Asian countries are expected to contribute to more than 58% of incremental global primary energy consumption until 2030.”

Developing countries in Asia rely mainly on coal and other fossil fuels to support their economic growth, and “finance should be made available to developing countries ... to move toward a low-carbon growth path.” ADB has “a vital role to play in promoting the deployment of new and efficient low-carbon technologies as they become commercially available and thereby lower the carbon content of energy supplies.”

The report calls for policy interventions for an accelerated shift away from fossil fuels, financial mechanisms to defer the higher capital costs of new technologies until they become available on a commercial scale, and capacity building and knowledge dissemination on low-carbon technologies and end-user energy efficiency improvements.

Renewable energy projects become more attractive than coal power plants when the costs of greenhouse gas emissions are introduced and, at higher fuel prices and at higher GHG offset prices, “the relative advantage of renewable and hydropower plants over thermal power plants becomes even more pronounced.”

“Renewable energy is still a high-cost option” for many developing countries in Asia and, although the share of renewables in some countries is increasing in response to fiscal and other incentives, as well as targets set by governments. “The costs per unit of energy from renewable energy projects are higher than the fossil fuel-based alternatives.”

“There is scope for further reducing the cost of energy from renewable sources by developing more appropriate technologies for the Asian region, promoting regional manufacture of renewable energy equipment, and exploiting scale economies arising from increased penetration of renewable energy technologies in the Asian region,” it concludes. ADB should consider promoting GHG-efficient investments where technically and commercially feasible and relevant, as a means to bring down the cost of renewable energy options.

“Scaling up development of appropriate and affordable renewable energy technologies for developing member countries through supporting regional research and development, pilot testing new technologies in selected DMCs, scaling up the deployment of new renewable energy technologies through technology transfer, and supporting regional manufacturing of packaged renewable energy products and subassemblies” were included as recommendations in the report.

ADB's support for renewables (mainly wind and small hydro) and large hydropower facilities from 2006 to 2008 was US$750 million, compared with US$215m from 2001 to 2005.

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