There has been much international publicity and press coverage recently in relation to the formation of the Asian Infrastructure Investment Bank (AIIB) apparently signaling a significant change in geopolitics, energy security and fossil fuelled development.
Since Dennis Shanahan's article "Australia Joins China's Energy Investment Bank" The Australian, 25 March 2015, there has been little further analysis of this subject, yet these announcements appear to signal a dramatic paradigm shift for both developed and developing nations.
Developing nations have found it increasingly difficult to obtain finance from the World Bank for fossil fuel related development. The International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), collectively known as the World Bank, has made it clear that coal fired funding in particular should not be funded and funds for such projects have been virtually choked off.
In 2010, following the inconclusive results from the Copenhagen round of climate talks, the US government stepped up pressure on the World Bank not to fund coal-fired power plants in developing countries. In a letter sent to the World Bank United States Executive Director Whitney Debevoise said, "The Obama Administration believes that the Multilateral Development Banks (MDBs) have a potentially critical role to play in the future international framework for climate finance, and, in particular, to assist developing countries in mitigating greenhouse gas emissions and strengthening their economies' resilience to climate risks".
Japan recently came in for massive criticism from the environmental movement for using the Green Climate Fund for high-tech coal plants.
The UN's position is aligned with that of the USA with the current UNFCCC head, Christiana Figueres, saying there "is no argument for that," (using the Green Climate Fund for high-tech coal plants), adding that "unabated coal has no room in the future energy system." However, even Yvo de Boer, the former head of the UN Framework Convention on Climate Change, has supported Japan's move and the use of coal.
Since most of the developing nations are unable to finance development without such as the World Bank, their industrial development, fight against poverty and national wealth are restricted by the anti-coal policies of the UN and USA and thus kept impoverished.
Since 2013, the World Bank's energy strategy limits the financing of coal-fired power plants to "rare circumstances", making it part of a push by U.S. President Barack Obama to fight climate change. Reuters, 5 November 2014
One example, as a result of the USA's controversial investment guidelines, the axe has already fallen on Pakistan's Thar Coal and Energy Project on the grounds that "the limited financing available from the Bank should be directed toward investments that address energy supply shortfalls in an environmentally sustainable manner''. -Swati Mather, The Times of India, 24 January 2010
"The Geological survey of Pakistan reveals that 175 billion tons of coal is buried under the Thar Desert. These coal reserves alone are equivalent to total combined oil reserves (375 Billion Barrels) of Saudi Arabia and Iran. The coal deposits in Thar can change the fate of the country if utilized in a proper way. The coal reserves at Thar Desert are estimated around 850 trillion cubic feet (TCF) of gas, and are worth USD 25 trillion. According to experts, if this single resource is used properly, we not only can cater to the electricity requirements of the country for next 300 years but also save almost four billion dollars in staggering oil import bills". -M Rafaqat Hussain, Pakistan Observer, 26 July 2014, and Reuters, 5 November 2014
Enter the recently announce but long in development concept of the AIIB. The Asia Infrastructure Investment Bank and the New Development Bank, established by the BRICS and sponsored by China.
There are currently 37 PFMs (Prospective Founding Members) in the Asian region, 20 PFMs outside the region, including Australia.
Belgium,Canada,and Ukraine are considering joining the AIIB (Application under consideration). Colombia, Japan, and the United States have no immediate intention to participate.
Discuss in our Forums
See what other readers are saying about this article!
Click here to read & post comments.
4 posts so far.