Jakarta – The Institute for Essential Services Reform (IESR) said that the second edition of the ASEAN Taxonomy for Sustainable Finance (ATSF v2) published by the ASEAN Taxonomy Board (ATB) in March needs full support from member countries for green financing. The publication of the second edition of the green taxonomy is a strategic step to attract global investment to ASEAN in support of sustainable development.
One of the first new things considered in the second version of the ASEAN Taxonomy is the phasing out of coal-fired power plants as a means of significantly reducing greenhouse gas emissions to achieve the Paris Agreement targets.
IESR Executive Director Fabby Tumiwa said that IESR welcomes the ATSF v2 as a common ASEAN standard for green financing. He said, the inclusion of funding for early termination of PLTU is an indication that governments in the region support the achievement of net-zero emissions by mid-century.
“More than half of the electricity in ASEAN comes from coal-fired power plants. Meanwhile, to achieve the Paris Agreement target, all coal-fired power plants must be retired by 2040,” Tumiwa said in a written release.
According to him, more than 50% of the operating power plants in the Southeast Asian region are less than 10 years old with the consequence that the early retirement of power plants requires considerable financial resources, so it is necessary to combine with financing for the construction of renewable energy plants to ensure security of energy supply in a region whose economy is growing rapidly. In this context, ATSF v.2 can accelerate the retirement of power plants in ASEAN through green finance.
Based on IESR’s analysis, over the last five years, the average investment in renewable energy has only reached USD 1.6 billion per year or 20 percent of the total investment needed to achieve the 23% renewable energy mix target in 2025. Meanwhile, highlighting international support, based on IESR’s calculations, there is potential for international funding of USD 13.1 billion or 35.4% of the total projected financing needs of USD 36.95 billion in 2025 to achieve the 23% renewable energy mix target. (Hartatik)