ADB’s US$1-B ‘environment protection’ loans unacceptable

MANILA, Dec. 2, 2010—An executive of a “green” non-government organization (NGO) fighting for “climate justice” for Filipinos said the US$1 billion loans extended by the Asian Development Bank (ADB) to fund programs aimed at improving the Philippines’ ability to cope with climate change is “unacceptable.”

“It is unclear whether reports about ADB’s $1 billion offer for climate change should be a cause for celebration or worry for the Philippines. Loans are unacceptable as climate adaptation financing,” said Renato Redentor “Red” Constantino, executive director of the Institute for Climate and Sustainable Cities (iCSC).

Constantino, former campaigner for Greenpeace, said that aside from being unacceptable, “ADB’s role in mitigation funding is also currently controversial.”

Citing as example ADB’s funding activity to support electric vehicle expansion in the Philippines, which Constantino said is “myopic” and “short-sighted” and will eventually “distort” the market for electric vehicles, he said its recent offer of a US$1 billion loan is also fraught with problems.

“If the new $1 billion announcement of the ADB is anything like its recent lending operations, we can expect more problems,” he said.

The ADB has recently extended funding support to the expansion of the electric vehicle in the country. But instead of stimulating long-term business development, ADB intends to just give away one e-tricycle to local government units (LGUs).

Also, the financing is not accompanied by any vehicle replacement plan or capacity building program that allows LGUs to shift steadily towards sustainable transport.

“Worse, it appears that the ADB is favoring one contractor, who will build hundreds of e-tricycles based on a single design that the ADB intends to impose, thereby distorting the market and marginalizing local manufacturers. There is something deeply wrong going on here,” he said.

Instead of dictating its terms, ADB should “ensure that its funding is based on needs identified by the Philippine government.”

“Climate finance should not be supply-driven. It is neither charity nor aid but compensation, considering the nature of climate change and the responsibility of rich countries to alleviate the impacts that are falling disproportionately on vulnerable developing countries,” Constantino stressed.

The Philippines, which accounts for only 0.27 percent of the world’s total greenhouse emissions, has been identified as one of the countries that face the highest risk of natural disasters resulting from climate change due to its location and archipelagic structure.

Developed countries led by the United States account for about 64 percent of the world’s total greenhouse emissions, while lower-income nations contribute 36 percent.

The ADB, through its principal climate change specialist David McCauley, recently announced that it will be extending loans to developing countries like the Philippines to implement environment-protection initiatives.

McCauley also said that the ADB will start releasing the US$1 billion loan to the Philippines in three tranches starting next year. The first tranche, worth about US$400 million, will form part of ADB’s three-year country assistance strategy (CAS) for the Philippines.

This will be used in the promotion of the use of solar energy, he said.

Aside from extending loans from its own fund, the ADB is also facilitating the extension of climate change-related credit from rich countries to developing nations.

Developed countries have been contributing to an overall fund intended to finance initiatives that would help developing and least-developed states cope with climate change.

But the iCSC, led by Constantino, and several “green” legislators from both Houses of Congress, are fighting tooth and nail for Filipinos to get payment from developed and rich countries for the impact caused by climate change in the country.

He said compensation is the heart of climate justice.

“This is also all the more reason why we are calling for the early passage of the People’s Survival Fund (PSF) bill authored by Senate President Juan Ponce Enrile. If we are able to mobilize our own resources, the Philippines is able to strengthen its negotiating position in leveraging the right kind of funds, in the right scale and from the right institutions abroad, to respond to the climate crisis,” he added. (Bong D. Fabe)