DUBAI, UAE – Multilateral lending firm Asian Development Bank (ADB) sees biggest potential for carbon emissions reduction with the energy transition mechanism (ETM) being pushed for the retirement or repurposing of coal plants all over the world.

“Coal-fired power plants produce more global greenhouse gas emissions than any other single source. Cutting their emissions is critical for meeting climate targets,” the bank stressed.

In his speech at the COP28 Climate Change Summit, ADB President Masatsugu Asakawa indicated that “once scaled up, ETM has the potential to serve as the largest carbon reduction model in the world.”

The ETM is an innovative and trailblazing program aimed at accelerating the retirement of coal-fired power plants throughout Asia and the Pacific; and to judiciously replace their capacities with renewables or clean energy technologies.

As that business model gains traction, Asakawa conveyed that the new partnership sealed by the bank at the Climate Change Summit in Dubai had been the signing of the memorandum of understanding (MOU) with the Monetary Authority of Singapore (MAS) and the Global Energy Alliance for People and Planet.

That deal, according to Asakawa, is targeting “to raise up to $2 billion from concessional and commercial capital providers to support the energy transition.”

As things stand today, he noted that initial results have already been manifest when it comes to the potential of ETM in transforming the energy sector – primarily in reducing carbon emissions of energy systems in the Asian region.

“We are seeing a growing list of partners who are supporting the just and affordable transition from coal and fossil fuel energy sources in Asia and the Pacific. As you have been hearing at this COP, the world needs to fast-track the energy transition and slash emissions. We also need to transform climate finance, and put people at the heart of climate action,” the ADB President stated.

Toward that end, Asakawa further announced the bank’s increased available climate capital via the Innovative Finance Facility for Climate in Asia and the Pacific or IF-CAP.

The ADB top executive said Japan injected $600 million contribution into the fund, hence, that enabled hike in IF-CAP’s financing guarantees to more than $1.0 billion – including $300 million contribution from the United Kingdom and $100 million from the Republic of Korea.

On accelerating ETM initiatives, the ADB hinted that “exciting new developments” are underway – and these are preview of even more positive developments coming forth in 2024.

In particular, the bank also forged energy transition collaborative partnership with Indonesia’s Ministry of Energy and Mineral Resources to fast-track the retirement of at least 660 megawatts of their coal plants’ capacity within seven-year stretch.

For the Philippines, the ADB has been instrumental in concretizing the first ETM transaction for the South Luzon Thermal Energy Corporation (SLTEC) coal plant of ACEN Corporation of the Ayala group as announced last year – and that targets the facility’s retirement ahead of its full operating life cycle of 40 years.