BRICS bank’s first project to be green, says Indian PM Modi

The Shanghai-based bank draws from a starting fund of US$50 billion

A new development bank to be signed off by emerging economies this week should make its first ever investment in the clean energy sector, says Indian prime minister Narendra Modi.

Members Brazil, Russia, India, China and South Africa will “operationalise” the $50 billion (311 billion yuan) fund – a counterpart to Western lending institutions – in the Ural city of Ufa, they said on Thursday. “I would like to see the first major project funded by the new (BRICS) development bank to fund clean energy,” Modi said at the BRICS summit’s opening, 730 miles southeast of Moscow.

The Shanghai-based bank dwarfs the UN signature Green Climate Fund, worth just $10 billion so far. It could award funds to its first projects by next April, its president said before the summit. Modi’s remarks could reassure those concerned about its lack of stipulations on carbon-intensive investments, such as coal-fired power plants, which generate cheap energy in developing countries.

Though the eventual share of the fund dedicated to green projects, such as solar farms or drought-resistant crops for example, is unclear. Modi called climate change “one of our foremost challenges” with “major decisions” to be taken this year at annual UN talks in Paris in December. The BRICS have skills and resources to make renewables and energy efficiency technology “affordable and accessible for all”, he said. Modi’s Chinese counterpart, Xi Jinping, said climate change and international development were “top priorities” in 2015. Each member state has put up $10 billion to the fund and they have pooled $100 billion to create a contingency currency reserve.

The BRICS make up 20% of the world’s GDP, almost equal to the United States, and are home to 3 billion people.Collectively, the five countries were responsible for nearly 40% of global greenhouse gas emissions in 2010, with China accounting for 22%. That makes them key actors in an international climate agreement.

Energy use in emerging economies is expected to soar by 2030. In India, more than 300 million people live without regular access to electricity. Strong growth in China and India in solar energy could see them take a lead on renewables.

This article was originally published on the Responding to Climate Change website and can be accessed here.