According to Donald Kanak, President of Prudential Insurance Group in Asia, the initiator of this project, investors will need to raise between $9 billion and $17 billion to remove 50% of coal power capacity in Vietnam.
Nikkei Asia reported that the Asian Development Bank and Prudential Insurance Group (UK) would announce ambitious investment plans to reduce carbon emissions in Asia at the United Nations COP26 climate conference in November.
The plan calls for the acquisition of the present coal-fired power plants and decommissioning them in 15 years, much earlier than their usual lifespan, which is 30-40 years. HSBC will also join the campaign. Nikkei said they were currently looking to the Philippines, Vietnam and Indonesia, in search of coal-fired power plants that can be purchased to close soon.
The plan is made to reduce the number of coal-fired power plants in Asia. This is becoming increasingly important, as the United Nations declares that all coal plants in the world must be shut down by 2040 to reduce carbon emissions.
At COP26, ADB wants to announce some coal plants they hope to acquire, as well as partner countries and companies.
ADB Vice President Ahmed Saeed said in an interview with Nikkei Asia: “The pilot program needs to be large enough to be meaningful and impactful. It can’t be just $100 million, or else you can [only] reduce a country’s coal capacity by 0.1%”, but he also said the investment must be “small enough to be able to achieve the fundraising goal.”
The Asian Development Bank has not set a target budget for the program, but it is initially estimated to be a number of billions of dollars. All three partners want to demonstrate that the taking-over of coal-fired power plants can be helpful for applying this program in the developing countries dependent on cheap fossil fuels.
They hope to take no more than a year to fund the pilot and demonstrate a successful acquisition at COP27 in 2022.
Although Wood Mackenzie consultancy group forecasted that renewables will soon be cheaper than coal in Asia, the region was still planning new coal-fired power plants. According to a report dated June 30 by the research organization Carbon Tracker, China, India, Vietnam, Indonesia and Japan are “accounting for 80% of the world’s newly planned coal power plants and 75% of the present coal power capacity”.
“Addressing the dependence on coal power, especially in Asia, is an urgent priority in the transition to net zero [carbon emissions],” an HSBC executive told Nikkei. “Clearly there is a need for cooperation and investment between the public sector and the private sector in the initiatives promoting a fair and orderly transition to renewables.”
The initiator of the pilot project is Donald Kanak, President of Prudential Insurance Group in Asia. He estimated it would take $16 billion to $29 billion to remove half of Indonesia’s coal power capacity. Investors will also need to raise between $9 billion and $17 billion for Vietnam and $5 billion to $9 billion for the Philippines.
“The participant countries will have to replace coal with renewables, otherwise it will be difficult to meet their climate goals,” Kanak said.
In addition to Indonesia, the Philippines and Vietnam, Mr. Saeed said other ADB members in the region also want to join the project. Meanwhile, investors are gradually showing more interest in the project.
Reuters reported that BlackRock and Citi were also working on the plan, but the companies did not give any response.
“Any effort to accelerate the transition from coal to cleaner power sources is welcome,” said VinaCapital Vietnam CEO Don Lam. “I am sure many parties will be interested in learning more about ADB’s proposals.”
He said his company, in partnership with South Korea’s GS Energy, was the first approved by Vietnam to replace a planned coal power plant with a $3 billion gas power plant. LNG is also a fossil fuel, he said, but produces only half of the emissions produced by coal.
Source: TQ-Cafef.vn
