The Philippines and Indonesia are poised to blaze a path in scuttling coal-fired power plants, which are major sources of greenhouse gas emissions, as the Asian Development Bank (ADB) earmarked $25 million as initial seed money for the multibillion-dollar Energy Transition Mechanism (ETM) meant to retire these carbon dioxide fountains.
ADB president Masatsugu Asakawa, Finance Secretary Carlos Dominguez III and Indonesian Finance chief Sri Mulyani Indrawati led the global unveiling of the ETM Southeast Asia Partnership at the COP26 (United Nations Climate Change Conference) in Glasgow, Scotland, on Wednesday.
The grant of seed money, announced remotely by Japan Finance vice minister for international affairs Masato Kanda, is intended to usher the ETM toward fuller development as it is being studied and piloted in Southeast Asia, starting with the Philippines and Indonesia.
“ETM can usher in a transformation in the battle against climate change in Asia and the Pacific,” Asakawa said at the launching rites.
“Indonesia and the Philippines have the potential to be pioneers in the process of removing coal from our region’s energy mix, making a substantial contribution to the reduction of global greenhouse gas emissions, and shifting their economies to a low-carbon growth path,” he added.
The ADB described the ETM as a “blended-finance” approach that seeks to retire existing coal-fired power plants on an accelerated schedule and replace them with clean power capacity.
Retirement, repurposing
Eventually, the ETM will comprise two multibillion-dollar funds—one for early retirement or repurposing of coal-fired power plants on an accelerated timeline, and another for new clean energy investments in generation, storage and grid upgrades.
The ADB expects that other multilateral banks, private institutional investors, philanthropic contributions and long-term investors will provide capital for ETM.
The bank said that as the ETM grows, it has the potential to become the largest carbon reduction program in the world.
During the pilot phase lasting two to three years, the ETM will raise the financial resources needed for the retirement of five to seven coal plants in Indonesia and the Philippines, while facilitating investment in alternative clean energy options within these countries.
Dominguez said the ETM has the potential to accelerate the retirement of coal plants by at least 10 to 15 years on average.
“A clean energy transition in the Philippines will create jobs, promote national growth and lower global emissions,” he said.
Two weeks ago, AC Energy Corp. president Eric Francia said the Ayala group’s power generation arm was looking into leveraging the ETM for the early retirement of the 270-megawatt facility of South Luzon Thermal Energy Corp. located in Batangas province.