AfDB to end financing for fossil fuel energy

UNITED NATIONS (AN) — The African Development Bank Group announced on Monday that due to climate concerns it will no longer support "19th century technologies like coal and heavy fuel oil" and will instead help create the world's largest "solar zone" in the Sahel region.

Speaking at the U.N. Climate Action Summit in New York, AfDB's President Akinwumi Adesina told world leaders the bank supports carbon neutrality for all by 2050. The bank's mission is to reduce poverty through sustainable economic development and social progress among member nations.

"Coal is the past, and renewable energy is the future. For us at the African Development Bank, we're getting out of coal," Adesina told the summit organized by U.N. Secretary-General António Guterres, who demanded that world leaders show up with real action plans instead of well-meaning speeches.

AfDB was created through an agreement among nations in 1963 and is now based at Abidjan, Ivory Coast. Like the World Bank, AfDB is one of the world’s five multilateral development banks. Its three main entities are the African Development Bank, African Development Fund and Nigeria Trust Fund.

Earlier this year the bank approved a loan of US$500 million to help African countries transition from coal and fossil fuel to renewable energy, including US$400 million to encourage major power projects and US$100 million to expand off-grid providers mainly in rural areas.

"There's a reason God gave Africa sunlight," he told the summit, referring to the sun-scorched Sahel semi-arid region south of the Sahara. Adesina said US$20 billion of investments in solar and clean energy could provide electricity to 250 million people.

At the climate summit, held on the sidelines of the annual high-level U.N. General Assembly, 40% of the United Nations’ 193 member nations committed to achieving carbon neutrality by 2050, and nearly the same amount vowed to take greater action to fight global warming by 2020.

Along with the commitments from 77 nations to net zero carbon emissions, and from 70 nations on global warming, 130 banks representing a third of the global banking sector and 100 business leaders pledged to run greener operations by shifting to renewable energy and curbing fossil fuel-burning linked to climate change.

The corporate moves were intended to align businesses with the 2015 Paris Agreement on climate change and the U.N.’s 17 Sustainable Development Goals for 2030.

In July, the European Union’s investment bank and nonprofit lending arm put forward a climate-oriented proposal that would prevent it from providing any new financing for fossil fuel-based power projects. Through its proposal, the more than 60-year-0ld European Investment Bank sent a strong signal to policy-makers, energy markets and suppliers.

Three 'key pledges'

Adesina said AfDB had "three key pledges which we believe close the loop on this global quest" to tackle climate change. First, he said, the bank wants to raise ambition by doubling its climate-related financing to US$25 billion between 2020 and 2025.

"Africa has for long been shortchanged by climate finance," he told the summit. "I call on partners to remove all unnecessary obstacles to Africa’s access to global climate finance."

Second, he said, the bank wants to help build resilience to climate-linked disasters through US$250 million for insurance premiums, with a potential payout of about US$1 billion from the reinsurance market by 2030.

And third, he said, the bank aims to deploy "solar technologies at scale to ultimately create the largest solar zone in the world" in the Sahel region.

"Those are the three catalytic initiatives we are committed to delivering to unlock Africa’s potential in the fight against climate change," Adesina said.

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