GLASGOW, UNITED KINGDOM (3 November 2021) — The Government of Japan today announced a grant of $25 million toward the Energy Transition Mechanism (ETM) partnership led by the Asian Development Bank (ADB).
The announcement was made at the launch of the ETM Southeast Asia Partnership at COP26 in Glasgow by Vice-Minister for International Affairs at the Ministry of Finance of Japan Masato Kanda.
The grant is the first seed financing to be announced for ETM, which is being studied and piloted in Southeast Asia, starting with Indonesia and the Philippines.
“ETM has the potential to be a game changer in cutting greenhouse gas emissions in Asia and the Pacific by accelerating the transition from carbon-intensive energy to clean, reliable energy,” said ADB President Masatsugu Asakawa. “We are grateful for the support of key partners such as Japan and others who support ETM and the need to take transformational action in the battle against climate change.”
“Japan has been emphasizing the importance of transition finance to achieve the 1.5°C goal, especially in the Asia and the Pacific region, where countries heavily rely on coal-fired electricity,” Mr. Kanda said. “Japan therefore fully supports the innovative ETM, which plays a critically important role in promoting the smooth transition from coal to cleaner energy while ensuring universal access to affordable and reliable energy. I believe that our grant contribution will become a seed money to attract much larger amounts of donor contributions and private investment, so that we can achieve a successful transition with our important partners, including Indonesia and the Philippines.”
ETM is a transformative, blended-finance approach that seeks to retire existing coal-fired power plants on an accelerated schedule and replace them with clean power capacity. The mechanism will comprise two multibillion-dollar funds: one devoted to early retirement or repurposing of coal-fired power plants on an accelerated timeline, and the other focused on new clean energy investments in generation, storage, and grid upgrades. It is envisioned that multilateral banks, private institutional investors, philanthropic contributions, and long-term investors will provide capital for ETM.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.