The Glasgow Financial Alliance for Net Zero (GFANZ) APAC Network has launched a public consultation on its proposed set of voluntary guidance steps for financing the early retirement of coal-fired power plants in the Asia-Pacific region as part of a just net-zero transition.
The development of this guidance is co-led by DBS and HSBC, and involves more than 10 GFANZ financial institutions. It is supported by key partners, including the Monetary Authority of Singapore, and incorporates existing work on coal phase-out by GFANZ, independent non-profit RMI, the Climate Policy Initiative, and the Asean Taxonomy Board.
The final guidance, according to a statement from the GFANZ, will outline practical steps that financial institutions committed to net zero can independently take to support the financing of coal phase-out transactions.
“The phase-out of coal is a matter of when and how it should be done,” says Surendra Rosha, co-chief executive for Asia-Pacific at HSBC. “The guidance we’ve set out serves as an ambitious and practical foundation to support catalytic and pioneering transactions.”
The GFANZ APAC guidance is expected to build on the emerging frameworks for the managed phase-out of coal-fired power plants, including GFANZ’s Managed Phase-out of High-Emitting Assets guidance released last year.
Asia’s coal dependency
Coal power generation is the largest source of carbon-dioxide emissions globally. Although coal power usage globally most likely peaked in 2022, it is expected to continue to rise in Asia for several more years due to growing energy demand in the region.
Pursuing the phase-out of coal power while ensuring an affordable and reliable energy supply, especially in the face of increasing demand, requires careful planning to reduce coal dependencies and accelerate investment in renewable energy.
It also requires grid infrastructure and power storage for intermittent renewable sources, and financial institutions will need to work alongside governments, multilateral development banks and other public and private sector parties to support sufficiently credible, financially viable and inclusive coal phase-out transactions.
“Coal-fired power plants in Asia are among the youngest in the world,” notes Piyush Gupta, chief executive officer at Singapore lender DBS. “Accelerating their early retirement will be complex and costly, but also key towards achieving a low-carbon future.
“The guidance aims to lay the foundation for financial institutions to work more effectively with governments and companies to drive collective action for a just transition by helping to reduce Asia’s reliance on coal and enable greater access to affordable, clean energy.”