| Project Detail |
The proposed regional technical assistance (TA) will assist ADBs developing member countries (DMCs) in Asia and the Pacific (APAC) in advancing a just energy transition that supports energy sector decarbonization via a progressive transition from fossil- fuels to clean technologies in an inclusive, affordable, and reliable manner.
The TA will assist targeted DMCs with a holistic range of solutions, including (i) supporting Just Energy Transition Partnerships (JETPs) activities; (ii) undertaking country level energy transition assessments; (iii) conduct project level transaction and pre-feasibility studies financed by JETP and ADBs Energy Transition Mechanism (ETM); and (iv) develop knowledge sharing and outreach programs.
Project Name Advancing Just Energy Transition in Asia and the Pacific
Project Number 57248-001
Country / Economy Regional
Project Status Active
Project Type / Modality of Assistance Technical Assistance
The proposed regional technical assistance (TA) will assist ADBs developing member countries (DMCs) in Asia and the Pacific (APAC) in advancing a just energy transition that supports energy sector decarbonization via a progressive transition from fossil- fuels to clean technologies in an inclusive, affordable, and reliable manner.
The TA will assist targeted DMCs with a holistic range of solutions, including (i) supporting Just Energy Transition Partnerships (JETPs) activities; (ii) undertaking country level energy transition assessments; (iii) conduct project level transaction and pre-feasibility studies financed by JETP and ADBs Energy Transition Mechanism (ETM); and (iv) develop knowledge sharing and outreach programs.
The proposed TA will work in close coordination with ongoing ADB energy sector operations and other energy transition initiatives, such as the Climate Investment Funds Accelerating Coal Transition (CIF-ACT), among others. JETP has broad support from a range of development partners as a mechanism to address the challenges of the energy transition. Given ADBs emerging lead role on JETP in multiple countries, it is envisaged that the proposed TA financing will be subsequently expanded through additional financing from ADB and external sources.
The TA will focus initially on Southeast Asian DMCs, particularly in Cambodia, Indonesia, the Philippines, and Viet Nam, whereas other Southeast Asian DMCs, may also be supported if demand arises. Other APAC regions will be supported once additional eligible funding resources become available in the future.
Project Rationale and Linkage to Country/Regional Strategy
Asia is mostly powered by coal. Electricity generation grew 3.4 times in the APAC region from 2000 to 2022, driven mostly by coal-fired power generation, which quadrupled in capacity within that period. In Southeast Asia, electricity generation had a similar increase of 3.3 times, but coal power generation increased almost 7 times since 2000 to 2022.
These large additions of coal-fired power generation capacity changed the composition of the power generation mix, slightly increasing coals share in APAC from 51% to 56%, with substantial increase in Southeast Asia from 19% to 40%, driven mostly by Indonesias fast track programs. This reliance on fossil fuels for power generation (mostly from coal) results in the continuing growth of carbon emissions in the APAC region, which doubled from 2000 to 2022 (footnote 2). In line with economic development and the associated growing electricity demand, carbon emissions are expected to continue growing by an additional 70% by 2030 in the absence of aggressive climate mitigation policies. Further, dependency on fossil-fuels for power generation adds significant financial risks to DMCs, as global oil, gas and coal prices can swing dramatically, affecting the cost of energy services and disproportionally impacting the poor. Nevertheless, thermal coal is expected to remain as the dominant fuel source for power generation in the APAC region.
Fossil-fueled power generation hampers achievement of climate goals. Phasing out unabated coal-fired power plants (CFPPs) is an essential lever to decarbonize the global economy in line with 1.5
C goal, with developed economies needing to phase out coal by 2030, and the rest of the world by 2040. Most countries have enacted ambitious nationally determined contributions (NDCs) and leading economies made large climate pledges. These pledges require an increase in annual investments in clean technologies from $1.3 trillion to $2 trillion by 2030. However, excluding the Peoples Republic of China, investments in clean energy in developing economies had remained flat since 2015, while new CFPPs keep being built.
Doubling efforts in power sector decarbonization. Acknowledging the urgent need to both retire CFPPs and scale up renewable energy generation capacity, ADB launched the ETM in November 2021 at United Nations Conference of Parties (COP26). Since then, good progress was made working together with the governments of Indonesia and the Philippines, launching the Indonesia ETM Country Platform in November 2022, announcing the Indonesia JETP with $20 billion pledged over a three-to-five year period, signing an memorandum of understanding (MOU) for the first ETM private-sector transaction to retire a CFPP in Indonesia, and supporting the Indonesias investment plan development under CIF-ACT. More work is needed to keep moving forward the decarbonization agenda in APAC DMCs.
Strategic alignment. The proposed TA is aligned with regional and targeted DMCs strategic plans to decarbonize their energy sectors, such as the (i) 2022 updated NDCs for Indonesia, Thailand, and Viet Nam; (ii) Indonesias Long-Term Strategy for Low Carbon and Climate Resilience 2050; (iii) draft of the Philippine Energy Plan 2023-2050; (iv) Cambodias Power Development Plan 2021-2040; and (v) Viet Nams Power Development Plan VIII, among others. The TA is consistent with ADB Strategy 2030 operational priority (OP) 3 to tackle climate change, build climate and disaster resilience and enhance environmental sustainability, and OP 6 to strengthen governance and institutional capacity, ADBs Climate Change Operational Framework, and the five principles of ADBs 2021 Energy Policy. It will also complement ADBs ongoing energy sector operations in the targeted countries in alignment with the Country Partnership Strategies objectives in climate mitigation and adaptation.
The TA builds on the work done under the reginal TA 6744 Accelerating the Clean Energy Transition in Southeast Asia, and the Japan Fund for Prosperous and Resilient Asia and the Pacific (JFPR)-funded TA 10122 to provide institutional support and implementation capacity to the JETP Secretariat in Indonesia. The TA will be administered by the Energy Sector Office of the Sectors Group, in close coordination with the Climate Change and Sustainable Development Department, Office of Markets Development and Public-Private Partnership, Private Sector Operations Department, resident missions, concerned ADB departments, and across sector and thematic groups in support of the One ADB approach.
Impact
Increased financial mobilization to support climate-aligned transitions |
