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Haneea Isaad is an energy finance analyst at IEEFA. Based in Pakistan, she covers Asian energy markets with a focus on Southeast Asia and Pakistan.
The issue of coal lock-in can be defined as a state of an energy system where high capacities of coal-fired power plants are present in the energy system, backed by long-term financial agreements which cannot prematurely end. This discourages alternate forms of power generation, even if they are more economically viable.
Vietnam, Indonesia, and the Philippines have come into the spotlight as the first three countries chosen by the ADB to pilot its ETM. However, these three countries must navigate a challenging course, given the complex nature of their coal lock-in.
The scale of coal pipelines in Southeast Asia illustrates the reality that coal lock-in will only get worse if business continues as usual.
In August, the Asian Development Bank (ADB) announced an ambitious plan to buy high emissions coal-fired power plants in Southeast Asia and retire them within 15 years through an energy transition mechanism (ETM). If the ETM is not designed correctly, it could potentially prolong the life of - and the emissions from - these coal-fired power plants.