In a first, Asean allows coal phase-out to raise sustainable financing

SOUTH-EAST Asia’s financial-sector policymakers have opened a door for the phasing-out of coal to access sustainable financing.

In a region where coal supplies a quarter of energy demand, the inclusion of coal phase-out in the Asean Taxonomy crucially paves the way for the Association of Southeast Asian Nations’ numerous coal-fired power plants to obtain transition financing – provided those assets are retired in a sufficiently timely manner.

The inclusion marks the first time any regional taxonomy has spelled out clear conditions under which coal phase-out can obtain transition financing. While the burning of thermal coal is widely recognised to be a major contributor to global warming, there is also growing acknowledgement of the need for a “just transition” as developing communities are weaned off the fossil fuel.