The Asian Development Bank plans to create funds, possibly next year, to facilitate early closures of coal-fired power plants in Southeast Asia. The new funds will buy such plants and take an active role in their management.
Working with governments and financial institutions, the ADB plans to launch the funds in countries such as Indonesia that rely heavily on coal for power generation, aiming to speed their transition to a low-carbon economy.
“To coincide with the United Nations’ COP26 climate summit, the ADB will revise its energy policy. For a start, we will stop extending loans to build new coal-fired power plants. We will also establish funds to help retire existing plants before the end of their life cycles,” said ADB President Masatsugu Asakawa in an exclusive interview with Nikkei. COP26 will open in late October in Glasgow, Scotland.
The funds will be financed with government grants and long-term, low-interest loans and solicit investments from financial institutions. Several lenders are believed to be showing interest. The ADB aims to set up a fund to buy power plants and another to promote renewable energy in Southeast Asia. It has started consultations with the governments and utilities in coal-dependent countries such as Indonesia, the Philippines and Vietnam.