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COP26 latest: Asian Development Bank to buy and shutter coal power plants

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The Asian Improvement Financial institution is launching a brand new fund that can purchase coal energy crops as a way to shut them down early, taking a brand new method to the vitality transition.

ADB is launching the pilot fund of $2.5bn to $3.5bn, referred to as the Vitality Transition Mechanism, that can concentrate on shopping for crops in Indonesia, the Philippines and Vietnam. Coal is the dirtiest fossil gasoline by way of emissions, however broadly used to generate energy in areas similar to Asia.

The programme goals to shut down 50 per cent of coal-fired energy crops in these three international locations, which might price between $30bn and $60bn, in response to David Elzinga, senior vitality specialist at ADB.

“We’re right here to purchase coal crops, to speed up . . . their retirement. That’s the solely motive we might enter into any acquisition,” he mentioned.

The group will group up with different funding sources, together with governments, philanthropy and personal traders, to entry low-cost loans to buy the utilities. The crops will proceed to function till the loans are repaid, then they are going to be shuttered.

“The concept of the [initiative] is to take the vary of traders, and mix totally different financing, to create a really low common price of capital,” mentioned Elzinga.

He estimated {that a} coal plant with 20 years remaining in its operational life would possibly have the ability to be shut down six to eight years sooner, below this mannequin.

“Individuals say, why not shut them down tomorrow? Effectively that may be actually costly,” Elzinga mentioned. “That is actually meant to be a managed acceleration of retirement. To ensure the market [is] nonetheless steady and viable, for future investments for clear vitality.”

Along with shopping for coal crops, the programme will even use incentives to pay sure operations to retire early, and construct renewable vitality initiatives the place applicable.

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