Blackrock joins banks to buy and close coal plants in Asia

SOME of the world’s largest financial institutions including Blackrock and Citigroup are planning to buy coal-fired plants in Asia and operate them in such a way that their closure can be accelerated.

Referencing a Reuters report, Bloomberg News said HSBC Holdings, Asian Development Bank (ADB), and Prudential were also party to the proposals. In terms of their idea, some coal plants would be operated for as long as 15 years before closing the assets ahead of their current schedules.

Asia, with China and India account for two-thirds of global coal demand which is one of the most significant man-made contributors to climate change, said Bloomberg News. Consumption in key markets is forecast to increase for the next few years and coal-fired electricity generation could hit a record in 2022, according to the International Energy Agency.

By acquiring and running the power plants at a lower cost of capital than is currently available to commercial operators, ADB and partners would be able to generate similar returns over a shorter period, facilitating the early closures of the assets, Reuters reported.

Funding for the ADB plan is expected to come from both public and private institutions, although targets have not been set, said Ahmed M Saeed, the lender’s vice president for East Asia, Southeast Asia, and the Pacific.

ADB is currently in discussions with governments in Vietnam, Indonesia and the Philippines on the proposal, and may see a pilot acquisition that is “big enough to matter” next year, Saeed said. ADB plans to start raising funds at the COP26 climate conference in November.

For the plan to be successful, it will need countries to commit to not replace eliminated coal use with other fossil fuels, said Saeed. The timeframe of 15 years will allow for sufficient planning, and will help to avoid consequences such as poor regions suddenly losing access to heating, he said.