Green Public Investment Management: Governance Aspects of Strengthening Infrastructure Sustainability

GreenPublicInvestmentManagement GovernanceAspectsofStrengtheningInfrastructureSustainability Summary.1Thisbriefdiscussestheimportanceofgreenpublicinvestmentmanagement(PIM)forsupportingeconomicgrowthandattaininginfrastructuresustainabilityintheAsianDevelopmentBank(ADB)developingmembercountries(DMCs),2assessesoptionsforidentifyingprioritygreeninfrastructuregovernancereformneeds,andseekstofacilitatediscussiononthefurtherstrengtheningofADBsupporttogreeninfrastructuregovernanceintheDMCs.ItarguesthatbettergreenPIMwillhelpDMCsimprovetheirpublicinvestmentoutcomes,meettheiradaptationandmitigationobjectives,andstrengtheninfrastructuresustainability.ThebriefsummarizesthemainassessmenttoolsthatcanhelpcountriesstrengthentheirPIMandgreenPIMinstitutions.InlinewiththeapproachsetoutinADB’sSupportingQualityInfrastructureinDevelopingAsia,3thebriefarguesthatthelonger-termeffortofbuildingsustainableinstitutionsinDMCswouldbestbeaccompaniedbylonger-termandprogrammaticsupportfrominternationalorganizations.Thiswouldincludebothlending—intheformofinvestment(project)loansforPIMreformsand/orasectordevelopmentprogramthatcombinespolicy-basedandinvestmentlending—andasustainedincreaseinrelatedtechnicalassistance(TA)andtraining. ThisGovernanceBriefhasbeensupportedunderADBTechnicalAssistance6749:ImprovingInfrastructureandState-OwnedEnterpriseGovernanceforSustainableInvestmentandDebtManagement BackgroundandContext Theglobalclimateemergencyishere,andthefightagainstitwillbewonorlostinAsiaandthePacific.4MostADBmembercountriesinAsiaandthePacific,butparticularlytheDMCs,areathighorheightenedriskfromclimatechange,includingtheresultingincreasedintensityandfrequency ofextremeweatherevents.5Atthesametime, countriesinAsiaandthePacificaccountformorethanhalfofallglobalcarbondioxide(CO2)emissions,andsomeoftheDMCsareamongthelargestglobalcontributorstotheincreasedatmosphericconcentrationofgreenhousegases(GHGs),particularlyCO2.WiththeincreasedatmosphericconcentrationofCO2being ISSUE50•2023 TheGovernanceBref Forinquiries,comments,andsuggestions onthisgovernancebrief,pleasecontactHanifRahemtullaat +63286826997or hrahemtulla@adb.org,GovernanceThematicGroup,SDCC,ADB. PreviousissuesofTheGovernanceBriefcanbeaccessedathttp://www.adb.org/publications/series/governance-briefs. 1ThisbriefwaspreparedbyGerdSchwartz,anAsianDevelopmentBank(ADB)consultant. 2Theterms“infrastructuregovernance”and“publicinvestmentmanagement”(PIM)areusedinterchangeablyinthisbrief,although“infrastructuregovernance”isthepotentiallybroaderterm,asitalsoincludesprivateinfrastructureassets.Theterms“greeninfrastructuregovernance”and“greenPIM”arealsousedinterchangeablyhere. 3ADB.2021d.SupportingQualityInfrastructureinDevelopingAsia.Manila. 4ADB.2021b.ADBRaises2019–2030ClimateFinanceAmbitionto$100Billion.Newsrelease.13October. 5AtthecurrentGHGemissionrates,averageglobaltemperaturescouldincreasebyover2˚Celsiusby2050,themaximumfortemperatureincreasesbeforereachingdangerouslevels. “man-made”—reflectingarangeofhumanactivitiessuchasburningfossilfuels(e.g.,coal,naturalgas,andpetroleum),manufacturingcement,producingfertilizer,clearingforests,andvariousotherchangesinlanduse—theincreasedCO2concentrationscouldalsobe“man-unmade.” Accordingly,theglobalcommunityhasbeenrampingupitsworkontheglobalclimate emergency.FundamentalinthisregardistheParisAgreement,whichaimsat“holdingtheincreaseintheglobalaveragetemperaturetowellbelow 2°Celsiusabovepre-industriallevelsandpursuingeffortstolimitthetemperatureincreaseto 1.5°Celsiusabovepre-industriallevels,recognizingthatthiswouldsignificantlyreducetherisks andimpactsofclimatechange.”6Sincethen,otherimportantactionshavebeentakentohelp countriesachievethegoalsoftheParisAgreement.Keyinthisregardarethenationallydeterminedcontributions(NDCs),whicharecriticalforachievingtheParisAgreement’slong-termgoals.7Morerecently,theCoalitionofFinanceMinistersforClimateAction,whichbringstogetherfiscalandeconomicpolicymakersfromover70countries,hasbeenadvancingtheclimateactionagendaandspearheadingtheglobaltransitiontoward low-carbonresilienteconomicdevelopment.8 Notwithstandingtheeffortsoftheglobalcommunity,achievingenergysustainabilitybasedonrenewableenergysourcesremainsdifficult. Inparticular,theglobaleffortsto“unmake”CO2emissionshavebecomeevenmorecomplicatedbynewglobalchallengesandthreatstoeconomicdevelopment,includingthosestemmingfromthecoronavirusdisease (COVID-19)pandemicandtheRussianinvasionofUkraine.Thelatterhastriggeredarushtoreplacenonrenewable(“dirty”)energysourcesfromthe RussianFederationwithdirtyenergysourcesfromelsewhere,requiringsubstantialadditionaldirtyinvestmentstoaddressimmediateenergysecurityneeds.Atthesametime,massiveadditionalinvestmentsforrenewableenergysourcesarebeingpursuedwithevengreaterurgency,tosecureenergyneedsoverthemediumtolongterm. ADB’sApproachto AddressingClimateChangeandSupportingDisasterResilience ADBhasfullyembracedtheinternationalclimateactionagenda,guidedbytheParisAgreementAlignment(PAA)frameworkandtheQualityInfrastructureInvestment(QII)Principles.9 The201