Multilateral lending agencies such as China-led Asian Infrastructure Investment Bank (AIIB), Emerging Asia Fund (EAF) of the International Finance Corporation (IFC) and the Asian Development Bank (ADB) have been financing projects in Bangladesh, a practice many allege violates the Paris Agreement on Climate Change signed in 2016.
Despite being one of the most vulnerable countries to the impact of a warming planet, Bangladesh accepts the investments in projects that are detrimental to the environment and climate.
On the contrary, in 2008, the country set a target to generate 10 per cent of its total energy requirement from renewable sources by 2020 translating into at least 2.0 GW. In 2015, the target was set at 3.1 GW by 2021.
Experts say a lack of accountability, monitoring, lobbying and loopholes in the national policy of taking out overseas loans have allowed the multilateral development banks to scale up their investment portfolios in gas and coal-based power plants and transmission and distribution lines rather than sinking money into renewable energy production.
Although the government claims to generate sustainable energy, it undertakes energy projects based on fossil fuel, something hardly makes headway to achieving its ambitious target of 3.1 giga watt (GW) energy from renewable sources.
Besides the climate impacts, these projects have wider social impacts.
Many of these multilaterals do not have any comprehensive assessment of how much greenhouse gas an individual plant would emit.
The Paris Agreement calls for "an effective and progressive response to the urgent threat of climate change", commits signatories to pursue efforts to limit the global temperature increase to 1.5 degree Celsius above the pre-industrial levels.
Only the World Bank and the ADB support renewable energy initiative under the Infrastructure Development Company Limited (IDCOL).
With an investment of $ 453 million, the ADB is the lead financier in Bangladesh, which means 97 per cent of its investment in the energy sector goes to fossil fuel. However, the ADB has developed a climate change adaptation and mitigation action in a framework covering 2017-2030 after being criticised over its continued reliance on investments in fossil fuels.
From the very beginning, the AIIB announced its core values to be "lean, clean and green".
In 2017, it reiterated its values with a specified commitment to help client countries 'meet their goals and commitments' under the Paris Agreement and sustainable energy for all and the 2030 agenda for sustainable development, or the United Nations-led Sustainable Development Goals (SDGs).
But the AIIB has provided four loans to Bangladesh amounting to $ 405 million in the energy sector through supporting the government's drive to sustainable energy and energy access to the poor.
To date, the AIIB has failed to fulfil its promises in Bangladesh, not only failing to support low-carbon and pro-poor options, but prop up continued use of fossil fuels.
The AIIB has made 30 per cent investments in fossil fuels, including the Bhola independent power producer (IPP) while 70 per cent is invested in transmission and distribution projects.
Besides, the AIIB has investment in the emerging Asia fund (EAF) of the IFC, which supports Summit Power, which has only gas and oil plants.
In a joint press release, the IFC, EAF and a third investor EMA Power stated that there is a collective investment of $ 175 million in Summit.
Climate finance and environment governance analyst M Zakir Hossain Khan told this correspondent there is no room for setting up a single coal-fired power plant in the world after the Paris Agreement.
Besides, Bangladesh along with other poorer nations has made a commitment to generate 100 per cent energy from renewable sources by the middle of this century.
"The share of energy from renewable sources is only about 4.0 per cent or 530 MW from hydropower now, which is just the reverse commitments,' he said.
"We are investing in coal-based power plants even destroying the ecologically-critical areas like the coastal forests that will exacerbate climate," he said.
The government talks about sustainable development and climate finance. But the core value of sustainable development is conservation of ecology and environment, said the climate finance expert.
The government has been violating the article 18 (KA) of the Constitution on the protection and improvement of environment and biodiversity by investing in coal-fired power plants, he argued.
The World Bank itself is the trustee of Green Climate Fund (GCF). It is totally contradictory to its basic principle to finance the fossil fuel projects through the IFC. Sometimes, the multilaterals do not invest directly in environmentally degrading projects rather they use financial intermediaries.
Focal point of Bangladesh Working Group on external debt Mehedi Hasan said that in the 'Intended Nationally Determined Contribution 2015', Bangladesh has committed to voluntarily reducing GHG emissions by 5.0 per cent from business as usual levels by 2030 in power, transport and industrial sector.
Although the WB, IFC, ADB and AIIB have committed to comply with the Paris Agreement, 95 per cent of their investment in energy sector goes into fossil fuels and only 5.0 per cent to renewable energy sector, he said, adding even they are destroying environmental and social balance, violating their own policy.
Economist Professor Anu Mohammed said the multilateral development banks invest in the country capitalising on the weak national policy of the respective governments, monitoring system and accountability mechanism of the banks.
The government must have a clear guideline for sector-specific loans from the multilateral lenders in line with the climate change policies and action plans, he said.
"Bangladesh government has a contradictory policy to fight climate change and invests in such projects that in no way support the adaptation and mitigation policies."
"The government has been destroying the coastal areas with massive projects, which are the main pillar of resistance for any climate change-induced pressure," he said.
Kamrun Nahar is a reporter of The FE.
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