Energy Transition Mechanism (ETM)

Start & End Date: 2022-Ongoing

Country/Countries: Indonesia, Philippines, Vietnam

Multilateral Institution(s) Involved: Asian Development Bank

Case Study: Available

Asia and the Pacific can only realize its climate goals if it pursues a transition away from coal-based energy in the near term. Retiring 50% of the coal fleet in three of ETM’s pilot countries—Indonesia, the Philippines, and Viet Nam—could cut 200 million tons of CO2 annually, the equivalent of taking 61 million cars off the road. That would make it one of the biggest carbon reduction programs in the world.

ADB is currently piloting the scalable Energy Transition Mechanism (ETM). The ETM pilot aims to retire or repurpose 5-7 coal-fired power plants in the pilot countries Indonesia, the Philippines, and Viet Nam in the near-term. Repurposed plants will be converted to renewable energy generation or alternative uses. ETM is envisaged to be a public–private finance vehicle comprising two windows: 1) The Carbon Reduction Facility (CRF) to leverage the power of a blended finance approach to decommission coal-fired plants on an accelerated schedule, while allowing time to develop reliable, affordable, and clean replacement power; and 2) The Clean Energy Facility (CEF) to catalyse and channel investment in new renewable energy generation, energy storage infrastructure, and requisite grid and storage upgrades.