Australia Wants AIIB to Invest in Coal Power


Australia is reportedly lobbying hard for the China-led Asian Infrastructure Investment Bank (AIIB) to invest in coal power projects in Asian countries.

The newly-established development bank is currently drafting its energy strategy and the prospect that coal could be excluded from its priorities has alarmed both the Australian government and the country’s powerful coal lobbies, the Financial Times reported on Friday.

Australia accounts for around one-third of all coal trade in the world, with most of its coal exports going to China, Japan, South Korea and other countries in the region.

“The [Australian] government wants the AIIB energy strategy to acknowledge that fossil fuels will play a significant role in energy generation in the region for decades to come,” Kate Williams, spokeswoman for Australia’s Treasury Department, told Financial Times (paywall).

China launched the AIIB as “clean, lean and green” lender to finance infrastructure projects across Asia and the bank started operations in January with 57 member countries and US$100 billion in committed capital.

Focus on energy efficiency

The AIIB launched the first round of consultations in October for its energy strategy, which will be approved by the bank’s board in their annual meeting next June.

The bank’s first draft guidelines on the energy strategy published in October said Asia needs US$8,740 billion of energy investment by 2025 to implement already announced policies.

The paper said fossil fuel production has “severe negative impact” on densely populated cities in Asia and instead prioritised the upgrading of existing energy infrastructure to raise efficiency as well as investment in renewable energy.

But while it proposed that the AIIB would not consider financing nuclear plants at this stage, the paper did not completely close the door on coal and oil.

“Coal- and oil-fired power plants would exceptionally be considered if cleaner technologies are not available for well-founded energy security or affordability reasons,” the paper said.

The proposal is in line with policy practices of other lenders such as the Japanese-led Asian Development Bank (ADB) and the European Bank for Reconstruction and Development which in some cases have funded coal power projects.

But according to the Financial Times, the AIIB paper still raised sharp criticism from the Minerals Council of Australia, an industry lobby, which said economic development should “not be subordinated to climate policy objectives”.

Three approved power projects

The AIIB has so far approved eight loans worth US$1.13 billion in total to six projects in Asian countries including Bangladesh, Pakistan and Tajikistan and two projects in Oman, the bank’s first in the Arabian Peninsula.

Three of the approved projects are in the energy sector, including a hydropower extension project in Pakistan, a gas-fired power plant in Myanmar and a power grid upgrade in Bangladesh.

But Indonesia has said it hopes the AIIB – in contrast to the ADB and the World Bank  – will finance major coal-power projects in the country.

Australia is the sixth largest member country in the AIIB with a US$3.7 billion stake and 3.8 percent of votes.

China is the largest member country with a USA$29.8 billion stake and 28.7 percent of voting power, followed by India, Russia, Germany and South Korea.


Source: GB Times

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