The world's largest climate-finance alliance has initiated a public consultation on its guidance aimed at financial institutions and other entities working towards expediting the phased withdrawal of coal power in Asia. This region heavily relies on coal, which constitutes around 60% of its power generation and is the dirtiest fossil fuel. Ending this dependency is crucial for achieving global climate targets and is a central aspect of initiatives like the Just Energy Transition Partnerships.

However, financing efforts have faced challenges due to a lack of transparency and the potential for "leakage" - the risk that closing one coal plant merely shifts emissions to another location. Many major financial institutions have implemented restrictions or outright bans on coal investments, even for early retirements.

Ravi Menon, Managing Director of the Monetary Authority of Singapore, and Chairman of the GFANZ APAC Network Advisory Board, noted that expanding portfolios of green projects alone will not solve the net-zero emissions problem because it does not address emissions from existing coal plants. Instead, the focus should be on embracing coal in order to phase it out gradually.

The Asia Pacific chapter of the Glasgow Financial Alliance for Net Zero (GFANZ) has released guidelines that propose a three-step process for coal phaseout plans. It advises stakeholders to ensure the credibility of energy transition strategies at various levels, prioritize meaningful outcomes in climate, financial, and socio-economic terms, and promote transparency and accountability.

GFANZ, which brings together more than 500 finance firms managing trillions of dollars in assets, is inviting feedback on the guidelines until August 4. The final report is expected to be published prior to the UN Climate Change Conference at the end of the year.