The African Development Bank will no longer finance coal projects, bank president Akinwumi Adesina announced this week at the U.N. Climate Action Summit. It was the first public announcement by the bank committing to end financial support for coal.
Coal is the past, renewable energy is the future, Adesina told the audience. For us at the African Development Bank, we are getting out of coal.
The last coal investment the bank made, which was in 2015, was a supplementary loan of about $4 million for a small, 125 megawatt coal-fired power plant in Senegal that it originally financed in 2009, according to Oil Change International, a U.S.-based advocacy organization.
Adesinas commitment puts the AfDB in the footsteps of other multilateral development banks that have severed support for coal projects. The World Bank Group, the European Bank for Reconstruction and Development, and the European Investment Bank now all have explicit policies that exclude coal from their portfolios, according to Oil Change International. Senior personnel at the Asian Development Bank and Asia Infrastructure Investment Bank have also made statements indicating they do not intend to finance further coal projects.
The European Investment Bank has a draft policy currently being considered that would end all of their fossil fuel financing beyond 2020. The draft is due for a decision this fall.
It's good to see the African Development Bank catching up with a lot of the other multilateral development banks that have already committed to move away from coal, said Alex Doukas, the lead analyst at Oil Change International.
Earlier this year, AfDB committed to doubling its climate financing to $25 billion by 2025 nearly half of which will be devoted to climate adaptation, according to Adesina.
We really feel strongly that at the African Development Bank what we should be focusing in on is a lot of clean energy, renewable energy, he told Devex in an interview in New York.
The bank has a variety of financial instruments that support countries in the development of their renewable sectors and also helps them with adaptation.
It has a $500 million green baseload loan facility, for example, that provides concessional finance and technical assistance to countries aiming to increase their renewable energy portfolios and a $250 million disaster risk financing facility that includes funds for insurance premiums for low-income countries hit by climate-induced disasters, Adesina said during his speech at the U.N. The bank also has a $500 million debt fund aimed at small-scale renewable energy projects that aim to create energy inclusion for low-income communities.