Asian Civil Society flags concerns over ADB’s Energy Transition Mechanism

The ETM seeks to help markets accelerate coal phase-outs. 

Fair Finance Asia (FFA) and NGO Forum on ADB (the Forum) have flagged some concern over the Asian Development Bank’s (ADB) Energy Transition Mechanism (ETM). 

The ETM is intended to help markets in Southeast Asia, South Asia, and Central Asia speed up coal phase-outs. It was first introduced in 2021.

“Civil society groups in the region are becoming increasingly concerned that the ETM is flawed by design, seemingly leaving communities and workers at the very sites where the ETM will be proposed to be piloted in the dark, as the terms and conditions of early power plant retirement are negotiated under non-disclosure agreements, while turning a blind eye to the demands by broad social movements across the region for publicly accountable processes to phase out coal and other fossil fuel industries without delay," Rayyan Hassan, Executive Director, NGO Forum on ADB, said. 

Read more: ACEN's successful ETM deal marks a new era for coal divestment

In the report, “The Asian Development Bank’s Energy Transition Mechanism: Emerging Social, Environmental and Rights-Based Considerations,” the organisations raised that ADB does not require participating governments or companies to suspend the development of planned or under-construction coal power projects. 

The mechanism also does not ask parties to commit to phasing out coal power by 2040, in line with the Paris Climate Agreement. 

The ETM also lacks clarity on the extent to which ADB’s social and environmental safeguards will apply at pilot coal power project sites over the course of retirement, amongst others. 

"Just energy transition is not as simple as shifting from fossil fuels to less carbon-intensive sources of energy," Bernadette Victorio, Program Lead, Fair Finance Asia, said. "The 'just' element must be reflected in the quality and pace at which the transition happens. Are the rights of communities, workers, and indigenous peoples respected and safeguarded? Are there broad, inclusive, democratic, and transparent consultative processes happening between key stakeholders? Are we ensuring that this whole process is not lopsidedly benefitting fossil fuel companies and their investors?”