Tuesday, 3 October 2023

MAS launches consultation on coal phase-out criteria under the Singapore-Asia Taxonomy

5 min read

The Monetary Authority of Singapore (MAS) launched a public consultation on the detailed thresholds and criteria for financing the early phase-out of coal-fired power plants (CFPP) under the Singapore-Asia Taxonomy.

The inclusion of managed coal phase-out under the Singapore-Asia Taxonomy aims to provide a credible standard to increase participation in projects for the early retirement of CFPP that are aligned with a 1.5 degrees Celsius (1.5°C) transition pathway. The early phaseout of CFPP is critical to the energy transition of the Asia Pacific region, where coal accounts for nearly 60% of power generation and about a third of greenhouse gas emissions, and where CFPP have relatively long remaining lifespans.

The Singapore-Asia Taxonomy sets Technical Screening Criteria that apply to the CFPP facility, as well as to the CFPP owner. The Technical Screening Criteria are aligned to global science-based 1.5°C-aligned decarbonisation pathways and take into consideration other guidance including the ASEAN Taxonomy, and ‘The Managed Phaseout of High-Emitting Assets’ report by the Glasgow Financial Alliance for Net Zero. The managed phase-out process can be considered aligned with the Singapore-Asia Taxonomy if all the facility and entity-level criteria are met.

Some of the key criteria at the facility level are that the CFPP must:

  • be phased out by 2040 and not have a total operating duration exceeding 25 years, in line with guidance from the International Energy Agency on what is consistent with a 1.5°C-aligned decarbonisation pathway for the global energy sector;
  • have positive fair economic value remaining and demonstrate verifiable emissions savings, so as to ensure that economically unviable CFPPs, which would likely have been shut down naturally, are not eligible; and
  • be replaced by clean energy capacity that is at least equivalent to the phased-out electricity capacity, to prevent ‘emissions leakage’ where the closure of a CFPP is offset by new CFPPs being built or by existing CFPPs being operated at increased capacity. Where a clean energy replacement is not feasible, it is still possible to demonstrate long-term emissions savings if there are national or regional level energy grid decarbonisation plans and commitments that are aligned to 1.5°C ambition levels.

Among the criteria at the entity level are that the CFPP owner must commit to:

  • no new development of CFPPs; and
  • a transition plan which has to reach full alignment to 1.5°C by 2030.


Re-disseminated by The Asian Banker

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