Decommissioning coal power plants . . .
The Asian Development Bank (ADB) and a consortium of investors are behind newly announced initiatives to hasten the closure of coal-fired power plants in Asia. The consortium includes U.K.-headquartered insurer Prudential; financial institutions HSBC and Citi; and, BlackRock, the New York-based investment management giant. The ADB-led proposals are centred on establishing public-private partnerships to purchase coal power plants and decommission them within 15 years, well before the end of their projected lifespans. These plants would then be replaced with new renewable projects as well as carbon capture and storage. Initial discussions with Asian governments and multilateral banks have been encouraging, reports suggest.
Delivering on climate pledges at scale?
In September 2020, Chinese President Xi Jinping announced his country’s intention to achieve carbon neutrality by 2060. The following month, Japanese Prime Minister Suga Yoshihide and South Korean President Moon Jae-in separately announced carbon net-zero targets of their own by 2050. Many analysts initially expressed skepticism at the achievability of these targets and the scale of technological innovation and massive energy transitions that would be required. But this new set of proposals may give these and other carbon neutrality pledges a boost of credibility. Further, China recently announced that in the first half of this year, it has financed no new coal plants under its Belt and Road Initiative (BRI), a first since the BRI was launched in 2013.
Toward the COP climate meetings in November . . .
Key to the plan’s success is access to financing at lower interest rates than those available to commercial power plant operators, and development banks such as the ADB accepting higher than usual risk and lower returns. At the same time, the public-private partnerships would lead investments in the renewable power generation projects replacing decommissioned coal plants. The initiative’s backers plan to attract additional financing and other commitments at the COP26 climate meetings in Glasgow, Scotland, in November. Achieving mid-century carbon neutrality goals will require major shifts in the systems that support how most of us undertake our daily lives, and this new ADB-driven plan may well help bring us closer to a reduced carbon future.