ADB sets plan to end Indonesia, Philippines coal plants

The Asian Development Bank (ADB) has launched an initiative with the Philippines and Indonesia to help remove coal from the countries' energy mix.

The Energy Transition Mechanism (ETM) plan relies on public-private funding. It seeks to accelerate the closure of existing coal-fired power plants, and replace them with clean power capacity. The plan will also support the development of clean energy generation, storage and grid upgrades in the region, ADB president Masa Asakawa said at the UN Cop 26 climate conference today.

During the pilot phase of the mechanism, ADP will support governments to raise the financial resources to accelerate the retirement of five to seven coal-fired power plants in Indonesia and the Philippines, according to the bank.

"It is clear that if we do not address emissions from existing coal power plants, we will not meet the Paris agreement targets," Asakawa said, referring to the deal's aim to limit global warming to 1.5°C against pre-industrial levels.

Today's announcement comes after the bank said in October that it will no longer fund new coal power production in the Asia-Pacific region.

Indonesia has pledged to reduce greenhouse gas (GHG) emissions by 29pc by 2030 from 2010 levels and to achieve net-zero by 2060 or sooner. But coal still accounts for around 67pc of the country's generation mix, according to the ADB.

Indonesia has 36.6GW of operational coal-fired generation capacity and an additional 11.8GW under construction, according to Global Energy Monitor. It is also the world's largest thermal coal exporter and is likely to ship 440mn t this year, according to Argus Consulting figures. The country produced 616mn t of coal in 2019, of which 152mn t was consumed domestically — 94mn t by power plants — and 455mn t was exported, according to the Indonesia's statistics agency BPS.

"ETM is an ambitious plan that will upgrade Indonesia's energy infrastructure and accelerate the clean energy transition toward net-zero emissions in a just and affordable manner," Indonesian finance minister Sri Mulyani Indrawati said today at Cop 26.

Commitments by state-owned utility PLN to phase out coal-fired generation and stop building new plants after 2023 would help achieve net zero targets by 2060, she said. "Decommissioning these coal-fired power plants is one of the key actions as part of the transition to a lower carbon economy," Indrawati said.

The Philippines, which has yet to set emission reduction targets, declared a moratorium on the construction of new coal-fired plants in October last year.

A scale up of the mechanism in Indonesia, the Philippines and "possibly" Vietnam could result in the reduction of around 100mn tonnes of CO2 per year, if around 50pc of the three countries' coal fleet was retired, the ADB said.

Japan has committed to support the ETM with a $25mn grant.

By Florence Schmit