Prudential Financial Incorporated, Citibank, HSBC Holdings Public Limited Company and BlackRock Incorporated will jointly develop plans for the closure of Asia’s coal-fired power plants to achieve lower carbon emissions in the region. The planwill also involve the Asian Development Bank (ADB), which has investedUSD1.7 million for feasibility studies in Indonesia, the Philippines, and Vietnam. The studywill estimate the costs of early closure, identify potential assets, and engage with the region’ governments and other stakeholders. The proposed scheme’s initial purchase, which will include a mix of stock, debt, and concessional financing, is expected to take place in 2022.
The plan will involve the purchase and operation of the coal-fired power plants at a reduced cost of capital than regular plants, allowing them to operate at a higher margin but for a shorter period of time. The cash flow generated will be used to pay off loans and repay investors. Other facilities will be utilised to accelerate renewable energy and storage investments in order to take over the energy load from the coal plants. Other details that still required to be finalised include methods to persudade coal plant owners to sell, what to do with the plants once they are decommissioned, rehabilitation requirements, and the role of carbon credits.