The Asian Development Bank (ADB), Citi, HSBC, Prudential, and BlackRock Real Assets have set up an initiative to accelerate the closure of coal-fired power plants in Asia to cut greenhouse gas emissions Reuters reported, citing sources with knowledge of the matter. According to them, the group had preliminary discussions with Asian governments and multilateral banks, which were promising.
The group plans to establish public-private partnerships to acquire coal plants and retire them in 15 years, faster than their average life. However, it is expected to give workers time to retire or find new jobs. During this period, countries can also shift to renewable energy sources. The initiative intends to have a workable model ready for the COP26 climate conference in Glasgow, Scotland, in November. The framework had already been presented to ASEAN finance ministers, the European Commission, and European development officials.
The initiative came as financial institutions face growing pressure to reduce fossil fuels in their funding portfolios. Reuters reported that the group could purchase its first plant as soon as next year, which will come as a mix of debt, equity, and concessional finance. The ADB plans to spend $1.7 million to conduct a feasibility study about the model in Indonesia, Vietnam, and the Philippines.
Coal-fired power generation is the world’s biggest polluter, accounting for about 20% of global greenhouse gas emissions. The International Energy Agency forecasts the world’s coal consumption to increase by 4.5% this year, with Asia contributing 80% of the expansion. Developing Asia has the newest fleet of coal plants and is expected to lag in cutting emissions from the sector.
