New Asian lender can clear the air

With around US$100 billion of capital at its disposal, its vision will help shape how our homes and cities are powered for decades to come.
And this could not happen at a more critical moment, with Southeast Asia’s economies growing fast and Indonesia alone looking to build 35 gigawatt of new power plants by 2020.
But will the AIIB continue to finance out-dated coal technology sold to us by Japan and China, which pollutes the air, or will it live up to its “clean, lean and green” mandate and help power our economies with modern, affordable renewable energy?
The signs so far are relatively positive. AIIB president Jin Liqun has emphasised he will lead a “pioneering” and “responsible” institution and at the World Economic Forum in Davos, the AIIB vice president for strategy and policy, Joachim von Amsberg, stated “there’s a strong consensus that AIIB has to be a green bank and the portfolio has to show that it’s a green bank and if the portfolio is full of coal projects you won’t look like a green bank”.
That the policy is to be launched in South Korea is particularly poignant given the recent election of a new president, Moon Jae-in, who swept to power promising to clean up the smoggy air. He has shut down a number of coal-fired power stations.
This will likely have residents of Jakarta and our other big cities nodding in agreement.
Based on research from Harvard University, if all planned coal plants begin operating, the increase in premature death will reach more than 15,000 lives every year in Indonesia.
More coal means more pollution, not to mention more communities devastated by the construction on new dirty power stations near their homes, or coal mining near their homes.
Meanwhile, more renewable energy doesn’t just mean cleaner air, it also means cheaper power. Each month it seems like new records are broken in terms of the cost of renewable energy.
According to Bloomberg, solar PV dropped a remarkable 83 per cent in 2008 to 2016, with wind down 71 per cent in the same period. And the price continues to drop like a stone.
India’s Energy Minister Piyush Goyal has reiterated that solar is cheaper than imported coal, with the country witnessing coal-fired power stations cancelled one after the other because they can no longer compete on price.
Little wonder then that last month, Jim Barry, the global infrastructure investment head of the world’s largest asset manager BlackRock, announced that “coal is dead. That’s not to say all the coal plants are going to shut tomorrow, but anyone who’s looking to take beyond a 10-year view on coal is gambling very significantly”.
For Indonesia, its abundance of coal might make it seem like the easy option, but many countries with coal reserves, from Great Britain to China, are choosing to leave them in the ground and shift to renewable energy.
Indonesia needs a better power supply and this means greater investment. Indeed, according to the International Energy Agency, Southeast Asia as a whole will need a cumulative $2.4 trillion to develop its energy supply. This is of course a challenge, but it is one that, by following its pioneering spirit, the AIIB can help to fulfil.
Indonesians deserve better than dirty air and an economy powered by old technology, and the AIIB must play a role in helping us get there.

The writer is head campaigner of environmental group Wahana Lingkungan Indonesia (Walhi) on energy and urban issues.