Multilateral development banks (MDBs), including the Asian Development Bank (ADB), continue to frame fossil gas as a viable “transition” option — a narrative that has enabled the expansion of gas infrastructure across the Global South despite mounting scientific, economic, and legal evidence against it. This approach has already locked vulnerable countries into volatility, debt, and pollution. Now, ADB's newly approved Energy Policy amendments risk deepening dependence and re-legitimising fossil fuels.
ADB released its updated Energy Policy, approving four major amendments — including lifting the ban on nuclear financing; supporting the development of diversified and responsible critical minerals to manufacturing value chains and facilitating regional cooperation and trade); allowing Carbon Capture and Storage (CCUS) projects which use depleted wells for carbon dioxide storage; and supporting methane leakage and routine flaring reduction in existing oil and gas projects). While presented as climate-aligned improvements, these amendments mark a troubling shift at a time when the region urgently needs pathways that are clean, affordable, and resilient.
Rajneesh Bhuee, Gas Campaign Manager , Recourse said “The Energy Policy Review could have been a great and timely opportunity for the ADB to set the stage for a genuinely Paris-aligned fossil gas phase-out by stopping direct and indirect funding for gas projects. However, it chose to maintain the status quo, adding gravely weak protections against gas expansion in the use of CCUS and minimal safeguards on methane leakage that leave significant scope for continued gas development, undermining any credible pathway to Paris alignment. Bangladesh’s Bhola gas expansion is a clear example: justified through claims of ‘lower emissions’ yet proceeding without binding methane-leakage controls or any viable CCUS pathway, locking the country into new gas infrastructure and unaccounted climate impacts.”
A False “Transition” — Fossil Gas Is Not a Climate Solution
In ADB’s 2021 Energy Policy, fossil gas was explicitly framed as a “transition fuel.” In the amended policy, ADB continues to take this position — even as it acknowledges that concerns have been raised about whether continued gas use is compatible with climate goals. By creating new openings for fossil fuel–linked interventions, the policy sends a signal that such infrastructure can still align with global climate goals — a claim increasingly challenged by scientific evidence, lived realities of front-line communities, and emerging international legal guidance. Gas is a fossil fuel, and its extraction, transport, and combustion generate greenhouse gas emissions, drive pollution, endanger public health, and compromise environmental safety.
The Tangguh LNG project in Indonesia is one example of ADB's support to gas expansion. It provided project loans for construction in 2005 and expansion in 2016. ADB and IFC also provided indirect financing: investing in equity to establish the Indonesia Infrastructure Finance (IIF) in 2010 their shared financial-intermediary client. IIF began investing in the expansion of the Tangguh LNG in 2016, and also supports various LNG projects across Indonesia.The Tangguh LNG project has been widely criticised for its environmental destruction, human rights violations, and contribution to rising greenhouse gas emissions.
Novita Pratiwi from Trend Asia said, “Currently, several regions in Indonesia have just been hit by Cyclone Senyar, which has destroyed buildings and caused casualties. This is proof that a climate crisis is happening now. If ADB provides financing for the Train Tangguh 4 expansion plan, it would be contributing to endless suffering for communities due to climate disasters. ADB has failed in its commitment to achieve the Paris Agreement, and remember that there will be no profit on a death planet.”
A Renewed Risk for the Global South: Fossil Gas, Debt and Pollution
Reliance on gas — particularly imported or externally financed gas — exposes countries to market volatility, price shocks, and geopolitical disruptions. For the Global South, this deepens energy insecurity, increases economic vulnerability, and widens social inequities. Many developing countries are already grappling with overlapping crises: soaring external debt, intensifying climate impacts, and persistent energy poverty. Fossil gas often sits at the centre of these converging threats.
Sharif Jamil from Blue Planet Initiative, expressed his concerns that “ADB is not only promoting fossil gas that contributes to the climate catastrophe here, Rupsha 800 MW LNG Power Plant is also an example where ADB has put further debt burden on a developing nation by rendering a loan for a stranded asset. It also blocks the opportunity for Bangladesh to explore untapped solar energy potential. People of Bangladesh do not want that to be gone under operation to increase more loans and methane emissions to the atmosphere.“
A Non-Participatory Review That Excludes Frontline Communities
Equally concerning is the process itself. The sudden release of amendments and limited consultation time contradicts ADB’s commitments to transparency and inclusive decision-making. Communities who face the direct consequences of fossil fuel infrastructure were not meaningfully included. Despite civil society raising these issues repeatedly during consultations the final outcome shows that community voices were sidelined in favor of fossil fuel interests.
Rayyan Hassan, Executive Director of the NGO Forum on ADB said “ADB’s so-called ‘Energy Policy amendments’ are a blatant betrayal of climate justice. Behind the façade of ‘technology neutrality,’ the Bank is greenlighting fossil fuels, nuclear projects, and destructive mineral extraction—while shutting out civil society and sacrificing frontline communities. This policy isn’t about solutions; it’s about creating markets for foreign corporations and pushing financial and environmental risks onto borrowing countries. We will hold ADB accountable for this climate and social failure.”
Ignoring Global Climate and Legal Obligations
By approving the revised Energy Policy without full consideration of climate change legal obligations or adequate due diligence, ADB and the governments that oversee it have acted in sharp contradiction to their legal requirements. A new independent legal opinion lays out the obligations of ADB and its Member States when acting under customary international law, and treaties such as the Paris Agreement, Law of the Sea, and various human rights treaties. To meet these obligations, ADB must eliminate, in all but truly exceptional circumstances, its financing of fossil fuel-related activities - which its Energy Policy fails to do.
“Drs. Lorenzo and Lin’s Opinion – the first legal analysis by scholars addressing ADB’s, IFC’s IBRD’s, and their member states’ climate obligations - is groundbreaking in that it should meaningfully drive climate response at MDBs following the powerful and authoritative International Court of Justice Climate Advisory Opinion establishing the climate change obligations of states,” said Jason Weiner, Bank Climate Advocates’ Executive & Legal Director. “We think the Opinion will mark a watershed moment for climate change reform at MDBs and in helping to avoid and prevent environmental and social impacts from their financing. It puts ADB, all MDBs and their Member States on notice. They need to stop financing fossil fuel projects and drastically enhance their climate due diligence to meet the best available science standard, or face potential litigation risks. The Opinion puts considerable legal might behind what should already be obvious: public money should not be used to enable dirty projects and worsen the climate crisis that threatens the survival and well-being of millions of people and communities around the world.”
Expanding Fossil Fuel Risks Through the Energy Transition Mechanism
Civil society has long warned that ADB’s Energy Transition Mechanism (ETM) could become a backdoor for fossil fuel refinancing. While the Bank has now removed the explicit ETM scope expansion from the final policy, the risk has not disappeared. Expansion remains “implicitly” permitted under the policy — effectively keeping the door open. Combined with the continued framing of gas as a “transition fuel,” these ambiguities create indirect pathways for future gas support and a potential expansion of fossil infrastructure. Instead of accelerating coal phase-out, the ETM risks replacing coal with gas — swapping one harmful fossil fuel for another.
Hussain Jarwar, Chief Executive Officer of the Indus Consortium, raised serious concerns that the risks of promoting gas under the ETM remain unresolved. He warned that “framing gas as a transitional fuel directly undermines the Nationally Determined Contributions (NDCs) of member countries, which commit to phasing down fossil fuels and accelerating renewable energy deployment. Citing Pakistan’s global leadership in advancing rooftop solar solutions, he stressed that “ADB should prioritize policy guidance, technical assistance, and project financing that genuinely support a people-centred Just Energy Transition — one that moves countries away from coal and all fossil fuels rather than locking them into new dependencies.”
The Solution: A Just, Renewable, People-Centered Transition
Communities in Asia and the Pacific deserve better than outdated, polluting technologies and debt-driven gas expansion. They deserve real solutions including:
- Rapid scale-up of renewable energy
- Investment in energy access and community resilience
- Transparent, participatory decision-making
- Protection of health, land, water, and livelihoods
- Financing that aligns with the Paris Agreement and human rights law
ADB’s choices today will shape the energy system of the next generation. This is the moment for true climate leadership — not blurred commitments disguised as progress.