Skip to main content [フレーム][フレーム]

Energy Transition Mechanism

Asia and the Pacific can only realize its climate goals if it pursues a transition away from coal-based energy in the near term. To accelerate this transition in the region, ADB is working with regional and international partners to support, study, and pilot a scalable Energy Transition Mechanism (ETM).

In the Spotlight

The Challenge

Asia and the Pacific relies heavily on fossil-based energy, which generates harmful emissions and pollutants. Shifting to clean energy can help provide sustainable, reliable power to the region--where millions still lack access to electricity--without the pollutants that threaten public health. Retiring coal-fired plants early through ETM will help drive investments in clean energy.

56%

of electricity generation in Asia
and the Pacific is sourced from coal

25%

of annual global emissions
come from coal-fired power plants

90%

of young (≤ 20 years) coal-fired
power plants are in Asia

What is ETM?

ETM is a collaborative initiative that aims to accelerate the transition from fossil fuels to clean energy. Developed in partnership with our developing member countries, ETM leverages a market-based approach and demonstrates how fossil fuels can be phased out.

The shift from legacy fossil-based power and heat generation has the potential to improve health outcomes by cutting harmful emissions and pollutants, promote energy security and affordability, and help create livelihood opportunities for people and businesses. This will unlock new investments in sustainable and reliable energy infrastructure.

The Benefits of ETM

ETM will significantly shorten the life of legacy coal-fired power plants and unlock new investments in sustainable and renewable energy. It will be a win for the climate, a win for local communities, and a win for developing economies.

Advance sustainable infrastructure

Countries participating in ETM can drive sustainable economic development through infrastructure that support cost effective reliable energy and emissions reduction.

Reduce dependency on imported energy

ETM will partner with countries to determine fit-for-purpose clean energy solutions utilizing domestic energy resources to decrease energy imports.

Reduce energy costs

Speeding up the retirement of fossil-based energy will increase the demand for clean energy, lowering overall energy costs in the long run.

Improve public health

Early retirement of fossil-based heat and power plants will help to reduce harmful emissions and pollutants, improving air and water quality, and public health for local communities.

Create new jobs and livelihoods

ETM engages with workers, communities, and businesses who depend on fossil fuel industries to help address their employment, skills, and livelihood needs during the transition process.

Demonstrate phase-out models that work

ETM has the potential to demonstrate how coal and other fossil plants can be retired early in Asia and the Pacific, and around the world.

Modernize the energy sector

ETM will utilize advanced digital technologies and improve worker capacity to optimize energy generation and transmission.

Drive investment

ETM will help to "crowd in" investment in cost-effective clean energy and support technologies like smart grids, hydrogen, ammonia, and electric vehicles.

The Importance of Safeguards and a Just Transition

ADB’s work on ETM will prioritize safeguards and a just transition, including high level consultations to avoid adverse impacts on the environment and people, and a commitment that the move toward renewable and sustainable economies will leave no community, industry, or worker behind.

Call for Inputs

Strategic Environmental and Social Assessment and Management Plan (SESA/SESMP) of the Energy Transition in Indonesia

Energy transition is a major focus in Indonesia's efforts to achieve sustainability and social justice. Indonesia's Ministry of Finance, Fiscal Policy Agency (BKF) invites stakeholders to participate in the Call for Input related to the Strategic Environmental and Social Assessment (SESA) and the Strategic Environmental and Social Management Plan (SESMP) of the Energy Transition.

Read the full report in:

Last update: 6 Mar 2025

The Cirebon MOU

ADB is in discussions with Cirebon Electric Power (CEP) and partners in Indonesia to explore the early retirement
of the first coal-fired power plant under the ETM program.

First Power Plant Acquisition

On November 14, ADB signed an MOU with CEP, PT PLN (Persero), Indonesia’s state-owned power utility; and the Indonesian Investment Authority (INA), to begin discussions for the early retirement of Cirebon-1, a 660 megawatt (MW) coal-fired power plant in West Java. The existing Power Purchase Agreement (PPA) with PLN expires in 2042. The MOU represents a major breakthrough for ADB’s ETM, which seeks to use blended finance to help Asia and the Pacific accelerate the retirement or repurposing of power plants that use coal and other fossil fuels and replace them with clean energy.

Cirebon-1 was chosen for several reasons. Firstly, it has the right combination of an interested owner, being a middle-aged plant, and having a financial structure that was suitable for refinancing. Secondly, the project company already has an active corporate social responsibility program, is engaged with the community, and is therefore suited to ensure the coal plant will be retired with strong just transition considerations. While each ETM transaction will have specific characteristics, ADB believes this is a great model case that can be replicated with other independent power producers.

ADB and partners are aiming to finalize a transaction for Cirebon-1 in the first half of 2024. The deal would likely see the plant retired seven years earlier than scheduled, which would save significant carbon dioxide emissions.

Should a deal be agreed to, the financing is expected to be a blended structure, including both concessional capital and capital from ADB's Private Sector Operations Department. The concessional funds will likely include donor-supported funds from ADB’s ETM Partnership Trust Fund as well as a portion of the recently approved Indonesia allocation from the Climate Investment Fund’s Accelerating Coal Transition window. The transaction structure is not yet finalized and a number of financial entities and philanthropies have expressed interest in participating in the transaction. ADB hopes to finalize a deal by the end of 2023.

ETM is committed to accelerating the retirement or repurposing of coal-fired power plants and replacing them with clean energy. ADB and PLN have agreed to develop a plan for the replacement power that would be lost when this plant is retired. Several renewable technologies, as well as distribution and transmission system upgrades, are being considered. As renewable energy and battery storage costs continue to decrease, there is optimism that replacement electricity can be done at a cost that is equal to, or lower, than contracted tariffs. Key considerations will include the fact that the existing plant provides baseload power, contrasted with solar and wind technologies that provide power only when the sun shines or the wind blows.

ADB is in discussions with a number of coal-fired power plant owners in Indonesia and the Philippines about exploring early retirements but cannot provide more details at this time due to non-disclosure agreements. ADB is also working with a number of stakeholders, including Indonesia’s sovereign wealth fund, INA, as well as industry associations, to find other potential transactions that can accelerate the transition from coal and other fossil fuels to clean energy.

What People Are Saying about ETM

  • "The Government of Indonesia, together with the Asian Development Bank has launched the ETM Initiative in COP26 in Glasgow. Since then, we have taken a step toward making this ETM a reality. Throughout 2022, we worked closely with ADB to build consensus with other relevant government and state-owned enterprises, especially PLN. We are working relentlessly to establish the Indonesia ETM Country Platform, a framework that will mobilize financial resources and support from international partners including multilateral, bilateral, philanthropist, and private sector groups to make "just and affordable energy transition" as the focal point for this ETM Country Platform."

    Sri Mulyani Indrawati
    Minister of Finance, Indonesia
    G20 ETM side event, 14 Nov 2022, Indonesia

  • "ADB has made remarkable progress since COP26, and I would like to commend the ADB team’s efforts so far. I also would like to express my heartfelt congratulations on the significant progress toward energy transition in ETM partner countries. A remarkable example is the recent announcement by Indonesia on the early retirement of Cirebon 1 under the ETM support. This is a historical step in the Asia-Pacific Region, ETM has the potential to be a game changer in energy transition in Asia-Pacific Region."

    Kentaro Ogata
    Deputy Vice Minister for International Affairs,
    Ministry of Finance, Japan
    COP27, 17 Nov 2022, Egypt

  • "ETM is really an innovative approach to address the elephant in the room—coal. Coal-fired powerplants represent the world’s single largest source of emission. Without accelerating the phaseout of coal, we will not be able to meet the objectives of the Paris Agreement. Kickstart finance is important so that ETM can implement and learn from its first pilots before fully scaling up."

    Anna Lührmann
    Minister of State for Europe and Climate,
    Federal Foreign Office, Germany
    COP27, 17 Nov 2022, Egypt

  • "Kazakhstan will need to develop a new approach in the power, heating, and water sectors as a single technological system, and we rely on ADB’s support and experience. I hope that this program will demonstrate technological shift and reliability of new systems through ETM which then can be replicated to other plants and regions."

    Almassadam Satkaliyev
    Minister of Energy
    Kazakhstan
    COP29, November 2024, Azerbaijan

News Releases

ETM in the News

About ADB

ADB is a leading multilateral development bank supporting sustainable, inclusive, and resilient growth across Asia and the Pacific. Working with its members and partners to solve complex challenges together, ADB harnesses innovative financial tools and strategic partnerships to transform lives, build quality infrastructure, and safeguard our planet.

Founded in 1966, ADB is owned by 69 members—50 from the region.

Headquarters

6 ADB Avenue, Mandaluyong City 1550, Metro Manila, Philippines

ADB encourages websites and blogs to link to its web pages.

AltStyle によって変換されたページ (->オリジナル) /