The AIIB and investment in action on climate change

Working and discussion papers
April 2016
Darius Nassiry and Smita Nakhooda

The choices that Asian countries make about how to meet their infrastructure needs, particularly in key sectors such as energy and transport, will fundamentally affect the planet’s ability to achieve low emission and climate resilient development, and keep global temperature changes below 2°C degrees as the Paris Agreement on climate change adopted at the end of 2015 sets out to do.

The Asian Infrastructure Investment Bank (AIIB) is an important new actor in international development finance led by developing countries to scale up investment in infrastructure. It has an opportunity to establish a new approach to infrastructure investment that prioritises renewable energy, climate resilience and sustainable development. The AIIB’s investments can help expand markets for renewable energy, and change the narrative around the emphasis of China’s overseas investments as one focused on clean sustainable development, rather than resource extraction.

Asian countries are already emerging as leaders in clean energy with new business models that meet the needs of poor people within poor countries. Most countries in the region are also highly vulnerable to the impacts of climate change. A focus on low emission paths to sustainable development represents an investment in a future with major long-term commercial benefits for many members of the AIIB.