According to the BBC, a handful of the world's biggest financial institutions are devising a plan to speed up the closure of coal-fired power plants in Asia. The initiative, developed by UK insurer Prudential, is being driven by the Asian Development Bank (ADB) and includes major banks HSBC and Citi.

The ADB aims to have the plan ready in time for the UN COP26 climate conference in Glasgow this November.

Why This Matters

Coal-fired power accounts for about a fifth of the world's greenhouse gas emissions, making it an outsized polluter. China specifically is the world's biggest emitter of greenhouse gases and also burned more than half of the world's coal in 2020.

• Meanwhile, the International Energy Agency (IEA) has predicted that global demand for coal will grow by 4.5% this year, with Asia making up 80% of that rise.
• The International Panel on Climate Change (IPCC) has called for global coal-fired electricity generation to fall from 38% to 9% by 2030.

Don Kanak, the chairman of Prudential Insurance Growth Markets, who developed the initiative, emphasized the importance of this project to the BBC:

The world cannot possibly hit the Paris climate targets unless we accelerate the retirement and replacement of existing coal-fired electricity, opening up much larger room in the near term for renewables and storage.

Shutting Down Coal Plants

This proposal aims for public-private partnerships to purchase coal-fired plants and shut them down before the expected end of their lifecycle. The program will also amass enough money to buy these plants well below the standard cost by allotting lower than usual returns to investors. The ADP plans to begin by buying coal plants in Indonesia, the Philippines, or Vietnam. This is crucial, as coal is very much still king in large swaths of Southeast Asia.

There are still some uncertainties about the proposal -- how to convince coal plant owners to sell them, and what to do with the plants once they cease functioning. The financial partners of the buyout proposal aim to collect financial commitments at COP26, as governments will commit to more aggressive emissions reductions and provide increased financing for countries most vulnerable to climate change.

Ahmed M Saeed, ADB's Vice President for East Asia, Southeast Asia and the Pacific said to the BBC: "By purchasing a coal-fired power plant with, say, 50 years of operational life ahead of it and shutting it down within 15 years we can cut up to 35 years of carbon emission."