Significant progress is continuing with ADB’s ETM pilot countries: Indonesia, the Philippines, Viet Nam, and now Pakistan and Kazakhstan
In 2021, ADB launched the Energy Transition Mechanism (ETM), a program aimed at helping confront the issue of climate change by reducing greenhouse gas emissions in Asia and the Pacific. More than 50% of the world’s greenhouse gas emissions come from our region, which still relies heavily on coal and other fossil fuels as a source of energy. ETM aims to use concessional and commercial capital to accelerate the retirement or repurposing of fossil fuel power plants and replace them with clean energy alternatives.
ETM began with three pilot countries, Indonesia, the Philippines, and Viet Nam, and has now extended to Pakistan and Kazakhstan.
Over the past several months, significant progress has been made in our ETM pilot countries. While ETM is scalable and replicable, the unique characteristics of each country require a range of ETM models. ADB is working extensively with stakeholders in participating countries to set up and tailor individual ETM programs.
Here’s where things stand now:
In Indonesia, ADB late last year signed a Memorandum of Understanding with Cirebon Electric Power, an independent power producer (IPP), and other partners to explore the early retirement of the first coal-fired power plant under the ETM program. The planned transaction, which would retire a 660-megawatt coal power plant in Western Java, is designed to be a replicable model that can be applied to other IPPs in Indonesia. Additionally, ADB is supporting the design and operation of Indonesia’s ETM Country Platform, which oversees the broad structure of energy transition activities in Indonesia and future programs to accelerate the retirement or repurposing of coal-fired power plants. ADB is supporting the development of Indonesia’s investment plan under the Climate Investment Funds Accelerating Coal Transition (CIF-ACT) program, which received in-principle approval to access $500 million of concessional capital in October 2022.
In the Philippines, ADB concluded a pre-feasibility study in 2021 and is still engaged with a full feasibility study. ADB is also working with the government to prepare an investment plan under the CIF-ACT window.
In Viet Nam, ADB conducted a pre-feasibility study in 2021 and is in discussions with key ministries to initiate a full ETM feasibility study.
In Pakistan, ADB secured $300,000 in technical assistance to conduct a pre-feasibility study, which began in October 2022 and is expected to be completed by July this year. Unlike in Indonesia, the Philippines, and Viet Nam, the priority for Pakistan is to transition away from oil- and diesel-fired power plants, although coal-fired power plants will likely be addressed as part of ETM’s pre-feasibility study. The study aims to analyze the viability of early retirement of high-carbon emitting fossil fuel-powered generation plants in Pakistan.
In Kazakhstan, ADB has provided a $225,000 grant to study the current domestic policy and regulatory environment for assessing the feasibility of accelerating the retirement or repurposing of coal-fired and combined heat-power plants. The grant was awarded in consultation with the Kazakhstan Ministry of Energy, which aims to achieve carbon neutrality by 2060.
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