The Glasgow Financial Alliance for Net Zero’s (GFANZ) Apac Network has launched a public consultation on its plans to phase out coal-fired power plants in Asia-Pacific.
Following similar guidance released last year, GFANZ is looking to create a set of voluntary guidelines for the early retirement of these plants, which it said will be a “key element” of decarbonisation on the road to net zero.
Mary Schapiro, vice chair of GFANZ, added she hopes the guidance will become a “practical tool for financial institutions to support plans to wind down the use of coal, help identify and implement clean energy projects, and support them to create positive environmental and economic impact”.
Coal power generation is the largest source of carbon dioxide emissions globally and is expected to continue to rise in Asia for several more years due to growing energy demand in the region.
In February a report by Global Energy Monitor found China had built the equivalent of two new power plants per week last year.
The GFANZ consultation is seeking feedback on aspects that financial institutions should consider in a credible, accelerated coal phaseout plan. This includes how to achieve transparency and accountability for coal phaseout plans in line with the GFANZ Net-zero Transition Plan framework.
Financial institutions are increasingly using transition planning aligned with this GFANZ voluntary framework to implement their own net-zero commitments, and will need governments, state-owned enterprises, and companies to undertake similarly ambitious, transparent transition planning, it said.
The Alliance plans to publish a report at COP28 in Dubai this year and the final guidance will outline practical steps that financial institutions committed to net zero can independently take to support the financing of coal phaseout transactions.
The development of this guidance was co-led by DBS and HSBC, involving 10+ GFANZ financial institutions. It was supported by the Monetary Authority of Singapore, and incorporated existing work on coal phaseout by GFANZ, RMI, Climate Policy Initiative and the ASEAN Taxonomy Board.
In April this year the ASEAN Taxonomy Board released the second version of its sustainable finance taxonomy, which emphasised the need to phase out coal.
Surendra Rosha, co-CEO, Asia-Pacific at HSBC, added: “The phaseout of coal is a matter of when and how it should be done. The guidance we’ve set out serves as an ambitious and practical foundation to support catalytic and pioneering transactions.”
The consultation is open until 4 August 2023.
