On August 3rd it was reported that financial institutions led by the Asian Development Bank and including Prudential, Citibank, HSBC, BlackRock are devising plans to accelerate the closure of coal-fired power plants in Asia in an effort to combat carbon emissions.
The coalition, which is collaborating with Asian governments and multilateral banks, aims to propose a workable model at the COP26 climate conference in Glasgow in November this year that will secure additional finance and support. This news comes as the Intergovernmental Panel on Climate Change report released on August 9th confirms that the Earth’s temperature is getting warmer at a more accelerated pace than predicted.
Asia hosts a relatively large number of newly completed plants with lifespans averaging around 30 years. As demand for coal in Asia continues to rise, the proposed plan would accelerate the replacement of coal-fired plants in the region to make space for renewable energy development. Closure of the acquired plants would occur through the creation of public-private partnerships that would buy out existing plants and scale back their operations to zero within 15 years.
While recently a number of private and public banks have improved their climate policies and committed to cease financing for new coal-fired power plants, those in the pipeline continue to be developed and these policies fall short of action required to meet targets set out in the Paris Agreement. Furthermore, as governments in Asia commit to phasing out coal and renewable energy become increasingly economically viable, coal developments are increasingly at risk of becoming stranded assets.
The ADB has stated it hopes to acquire the first coal plant in 2022 and has already set aside $1.7 million to conduct feasibility studies in Indonesia, the Philippines and Vietnam.
350.org’s Asia Finance Campaigner Chuck Baclagon issued the following statement on the news, emphasizing the need for a clear timeline towards decarbonization and a just transition for workers in those industries:
“They are finally catching up to the reality that the future is fossil fuel-free, and that there are clear economic benefits for pursuing low-carbon development in their investment priorities. However, it would be more powerful if the initiative shared a clear timetable for the phase-out.
Paris alignment entails decarbonization plans that include rapid and far-reaching transitions in land, energy, industry, buildings, transport, and cities. Global net human-caused emissions of carbon dioxide (CO2) must fall by 45% from 2010 levels by 2030, reaching ‘net zero’ around 2050. To keep global warming below 1.5°C, coal, oil & gas need to stay in the ground. Therefore, we must dramatically accelerate the transition to 100%, locally distributed, renewable energy systems.
Given that the initiative will be mainly reliant on PPPs, it is necessary that the transition should maximize the benefits of climate action while minimizing hardships for workers and their communities. It is therefore important that it should be pursued with due consultation with all those affected, respecting human and labour rights, and Decent Work principles.”
Research and early assessment of the social and employment impacts of the initiative should also integrate training and skills development for workers in the facilities that would be transitioning through the initiative because these are key elements to support the deployment of new technologies and foster industrial change”.