Deep Dive Workshop

Decarbonizing the Energy Sector: The Role of ADB’s Energy Transition Mechanism

Organized by: Asian Development Bank (ADB)

Legacy coal-fired power and heating plants constitute the single largest source of anthropogenic greenhouse gas (GHG) emissions, while the costs of clean and efficient energy technologies are rapidly declining. The transition from coal to clean energy sources must be accelertaed in order meet the targets in the Paris Climate Agreement.

Financially, the cost of operating existing coal fleets is expected to be higher than the levelized cost of new renewable energy plants in the next 10–15 years. However, many coal power plants have secured long-term power offtake agreements, which will keep them in operation, albeit uneconomically compared to market alternatives.

ADB launched the Energy Transition Mechanism (ETM) in 2021. ETM is a replicable and scalable market-based model to address these issues and help accelerate the clean energy transition, through blended finance structures.

ADB’s role is to help crowd in public and private sector partners, support a just transition for affected communities, ensure climate credentials, and harness carbon offsets. Currently, work on is under way on the technical and financial feasibility of ETP initiatives in ADB’s Developing Member Countries (DMCs) in Southeast Asia and other regions.