Scaling Financing for Coal Phase out in Emerging Economies 2025

Metrics to measure progress against abatement goals This table provides high-level considerations as to what kind of sources investors can consult to assess the credibility of a transition plan, as well as the possible metrics, using the ACEN SLTEC transaction as an example (see Box 1 above for further details).34TABLE 2 Criteria and level Possible considerations Sources from ACEN SLTEC exampleKPIs and metrics Government and system-level: Is a wider policy-enabling environment for CFPP phase-out in place and plans aligned with a science-based transition pathway?Key focus areas could include credibility and viability of renewables investment plans, alignment with Nationally Determined Contributions,35 granular detail on coal emissions reductions and phase-out, and just transition provisions.The Philippines Department of Energy’s Philippine Energy Plan (PEP) 2030-205036 provides detailed targets for clean energy addition, improving energy efficiency and reducing coal dependence.Short- and near-term targets to align with Net Zero by 2050. Moratorium on new coal assets. Development of transition plan. Entity-level: Does the asset-owner have a credible phase-out roadmap? Key focus areas include credibility of plans, level of granularity regarding targets and roadmap to achieve transition targets. The ACEN Net Zero Roadmap37 outlines plans and interim measures to transition. Short- and near-term targets to align with Net Zero by 2050. Commitment to no new CFPP development or procurement. Development of a transition plan. Asset-level: Are CFPP phase-out plans credible, not resulting in increased emissions elsewhere, and additional (would not have taken place without phase-out financing)?Key focus areas include details of forecast BAU CFPP operations profile (is it climate-ambitious, and offers a realistic reflection of the changing role of coal in the system), measures to ensure CFPP will actually close in line with the phase- out plan, and whether the plant would have closed anyway without retirement financing (additionality). CFPP generation forecasts in business-as-usual (no phase-out) scenario used in retirement deal. Contractual clauses and covenants assuring closure. Forecasted absolute emissions savings over lifetime of CFPP with early retirement versus business- as-usual scenario (independent verification) savings. Just transition roadmap. Land restoration.This guidance aims to assist investors in assessing the credibility of CFPP phase-out plans against key overarching criteria according to three levels: 1. Government and system-level: Is there a wider enabling environment to support the CFPP phase-out? 2. Entity-level: Is the CFPP phase-out aligned with a science-based pathway, for example, a region- and/or sector-specific transition plan, and is there critical need for additional financing to enable the phase-out?3. Asset-level: Does the asset owner/operator have a phase-out roadmap to ultimately retire the asset? Once an investment decision is made, financiers and asset owners need to ensure implementation of CFPP phase-out and delivery of real-world emissions anticipated at the planning stage. The guidance noted above recommends establishing clear key performance indicators (KPIs) against which to measure progress. A range of metrics can be used to measure progress against abatement goals, as outlined in Table 2. While existing guidance and standards converge around a set of key criteria to assess a transition plan, the lack of harmonization between institutions and regions creates challenges for investors and raises risk. Better alignment between standard-setters, guidance providers and government authorities would help investors navigate this complex challenge, ultimately helping to unlock large finance flows for coal phase-out. Scaling Financing for Coal Phase-out in Emerging Economies 22