Out-Law News 1 min. read
14 Jul 2023, 5:04 am
Singapore’s central bank has launched a public consultation on the detailed threshold and criteria for incorporating the financing of phasing out coal-fired power plants into its green finance taxonomy.
To be included within the Singapore-Asia Taxonomy, projects must be in line with the global science-based 1.5°C-aligned transition pathways, which has built a set of actions to limit global warming to 1.5°C above preindustrial levels. Technical screening criteria will apply to both coal-fired power plant (CFPP) facilities and to their owners.
Green finance expert Bryan Chapman of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, said: “It is hoped that providing clarity on what is green, what is transitionary, and what is neither, will provide certainty to the local energy market to enable the decarbonisation of ‘brown’ sectors. To ensure the Singapore-Asia Taxonomy meets its ambition, it is critical however that relevant market participants input into the public consultation with their thoughts on the published thresholds and criteria.”
Under the proposed criteria, for a CFFP facility to be eligible it must be phased out by 2040 and have a total operating time period of less than 25 years, which is in line with guidance from the International Energy Agency (IEA) on what is consistent with a 1.5°C-aligned transition pathway for the global energy sector. The CFPP must also have a ‘positive fair economic value’ - which will disqualify CFFPs which would have otherwise shut down naturally - and the power lost through the closure of the CFFP must be replaced by clean energy capacity that is at least equivalent to the closed-out capacity. This is to prevent 'emissions leakage', where a closed CFPP is offset by a new CFPP or an existing CFPP operating at a higher capacity.
CFPP owners must commit to not developing new CFPPs and demonstrate a transition plan that must achieve full consistency with 1.5°C by 2030.
The consultation will close on 28 July.
14 Jun 2023