The Asian Development Bank (ADB) hopes to secure final board approval this week on a $1.5 billion fund to boost clean energy investments in the region, an official said.
The public-private climate fund has been 18 months in the making and aims to tap sovereign funds and pension funds to make clean energy investments in Asia.
“We like to say that the fight for climate change will be won or lost in Asia,” said Samuel Tumiwa, the ADB’s Washington, DC-based deputy regional director.
“Investments need to be made to address sustainability, address climate change, so our clean energy programme is a critical part of what we do,” he told attendees of KPMG’s Global Sustainable Business Growth Summit in New York on Tuesday.
Tumiwa joined the bank in 2001 as a renewable energy specialist and travelled all around the region to places such as the Maldives, where he was told by one official that wind power was experimental. But now the government wants to develop wind projects to ease emissions, he said.
“It’s a small country, a microcosm, but it shows this tremendous shift in the need, the want, the willingness for investments in clean energy,” Tumiwa said.
In 2005, the bank only had about $250 million in clean energy investments, so it set a goal to increase its lending to $1 billion per year. This was a major effort because it had no expertise in the area and several Asian countries had no strong policies such as feed-in tariffs (FiT) to promote clean energy.
“It was really in many ways starting from scratch,” he said. “I think now there are a lot of investments in clean energy so we’re well on the way.”
The next level is to get this effort to scale, which is a challenge for the region, Tumiwa said. ADB’s early research showed that most investments in clean energy were going to European countries such as Germany and Spain, which had FiT programmes, and the US.
“Clean energy investments were only trickling into Asia so the challenge we put to ourselves is ‘how can we open the floodgates of financing’?,” he said.
“Financing follows the path of least resistance,” Tumiwa added. “Where would we get the highest return for the least amount of risk? We believe that the risk perception in Asia is much higher than it really is.”
The ADB set out to address this perception by initially working on small projects, but eventually progressed to a $100 million private equity funding with two small private equity funds that had never invested in Asia.
“We’re really trying to move that to scale,” he said of the new $1.5 billion fund effort.
The bank is also working to lower the costs of wind and solar technology, partly by collaborating with project sponsors to purchase wind turbines together in an effort to lower the costs, Tumiwa said.
“We really want to aggregate markets to bring down the costs of technology,” he said.
