Finance firms working to close coal plants in Asia
(Photo: SAM PANTHAKY/AFP/Getty Images).
SOME of the world’s major financial companies and institutions are working on a plan to speed-up the closure of coal-fired power plants in Asia to reduce carbon emissions.
The initiative driven by the Asian Development Bank (ADB) and developed by the British insurer Prudential, is also being followed by key lenders Citi and HSBC, the BBC reported.
The ADB hopes the closure plan will be ready for the COP26 climate conference, which is being held in Scotland in November.
Don Kanak, the chairman of Prudential Insurance Growth Markets, told the BBC: “The world cannot possibly hit the Paris climate targets unless we accelerate the retirement and replacement of existing coal fired electricity, opening up much larger room in the near term for renewables and storage.”
“This is especially true in Asia where existing coal fleets are big and young and will otherwise operate for decades,” he added.
Under the proposal, public-private partnerships will buy coal-fired plants and shut them far sooner than their usual operating lifespan.
Ahmed M Saeed, ADB’s vice president for East Asia, Southeast Asia and the Pacific said: “By purchasing a coal-fired power plant with, say, 50 years of operational life ahead of it and shutting it down within 15 years we can cut up to 35 years of carbon emission.”
The ADB is aiming to launch a pilot programme in a developing South East Asian nation – potentially Indonesia, the Philippines or Vietnam – in time for the COP26 event in November.
Key aspects of the initiative that are yet to be finalised include how coal plant owners can be convinced to sell them, what to do with the plants after they are closed, and what role if any carbon credits could play.
The plan has come in the wake of commercial, development banks and other major investors becoming wary of investing in new fossil fuel power plants as they strive to meet climate targets.
Coal-fired electricity generation accounts for about a fifth of the world’s greenhouse gas emissions, making it the biggest polluter.
As per the International Energy Agency forecast, global demand for coal will grow by 4.5 per cent this year, with Asia making up 80 per cent of that rise.
Meanwhile, the International Panel on Climate Change has called for global coal-fired electricity generation to fall from 38 per cent to 9 per cent by 2030.