Singapore has become the first country in Southeast Asia to announce an end to new coal-fired power plants financing. It is a significant move as Singapore have had financed several coal-fired power plants in the recent past. Only last year some of Singapore’s leading banks had policies that conditionally permitted coal financing. In fact the island nation’s banks have extended approximately US$2.29 billion loans to 21 coal power projects, especially in Indonesia and Vietnam since 2012.
The move is in alignment with western financial institutions that have already shun away from providing finances to coal fired power plants.
It is still to be gauged how the move will impact coal fired plant construction in Asia – especially when countries like China and India have significant projects. But these countries are also bringing in renewable energy sources such as solar and wind in their energy portfolio along with other Asean countries like - Indonesia, the Philippines and Vietnam.
Following the announcement by Singapore, Mitsubishi UFJ Financial Group (MUFG), has also revised its environmental and social policy framework and will no longer provide finance for new coal power projects. Between 2016-2018, MUFG sanctioned about US$3.5 billion for coal-fired plants.
Such a move is significant for Asia’s low carbon future. However, it has to be noted that a wider "green" effort in the financial system is needed so that capital is available for sustainable industries – particularly renewable energy. Already steps towards green or sustainable finance have gained traction in the West and in major Asian countries such as China.
Meanwhile Asean countries are also aiming to derive 23 per cent of its primary energy from renewable sources by 2025, as the region’s energy demand is set to rise by 50 per cent. Encouraging ‘green’ finances for solar and other low-carbon energy and infrastructure projects - that are commercially viable and quicker to deploy - will be key in the next few years.
Find out more about finances for renewable energy in Asia at CMT’s 2nd Vietnam Renewables Summit on 15-16 October, 2019, in Ho Chi Minh City.
For more information about the conference, contact Hafizah at
hafizah@cmtsp.com.sg or call +65 6346 9218.
