ADB’s coal buyout to cut 200 tons of carbon yearly
The Asian Development Bank (ADB)’s plan to buy coal-fired power plants and accelerate their retirement from operation is expected to reduce an initial 200 tons of carbon annually.
As the Manila-based multilateral lender exits from new coal financing, ADB is now working to form an energy transition mechanism (ETM) facility and this is being piloted in the Philippines, Indonesia and Vietnam.
The facility in each country comprises public, private, and philanthropic financing that will be used to purchase coal-fired power plants to fast-track their retirement and help jumpstart reliable and affordable clean energy.
Asia-Pacific accounts for nearly 40 percent of the world economy, but it is also responsible for around 80 percent of the world’s coal consumption and up to 50 percent of carbon emissions.
The region is both a major contributor to global greenhouse gases and a casualty of climate change and weather-related calamities.
With the three target pilot countries, ADB vice president Ahmed Saeed said the target is to reduce their coal-fired power by 50 percent.
“That’s 200 million tons of carbon a year or the equivalent of 61 million passenger cars. Just the pilot alone can be one of the largest sources of foreign offsets in the world,” Saeed said.
“But we think that much more is possible. We think that this is a structure that can be replicated and scaled, not just across our region, but also in other regions,” he said.
In a recent briefing, ADB energy division director for Southeast Asia Toru Kubo said an exit from new coal financing is far from sufficient because existing coal plants are a quarter of total carbon emissions and they tend to last for more than four decades.
“So if we don’t address existing ones, there’s no chance of actually hitting the Paris Agreement targets,” he said
The ETM will be made up of a carbon reduction fund and a clean energy fund.
The first aims to provide a blended finance mechanism to incentivize the early retirement of coal-fired power assets while the latter targets to invest in the growth and expansion of renewable power.