A group of the UK’s biggest financial institutions plan to hasten the phasing out of coal power in Asia by buying out fossil fuel plants in order to shut them down within 15 years.
Finance companies including lenders HSBC, Citi and BlackRock Real Assets together with UK insurer Prudential are working with the Asian Development Bank on the plans, according to a report by Reuters. There have also been “promising” early talks with Asian governments and multilateral banks.
But climate campaigners have said that HSBC’s involvement in the plan was a “cynical” attempt to distract from the bank’s ongoing investments in coal power before the Cop26 climate talks.
Adam McGibbon, a campaigner at Market Forces, which calls for financial institutions to use their wealth to protect the environment, said HSBC participated earlier this year in a $400m (£290m) loan to the Indonesian coal company Adaro Energy, which produced 54m tonnes of coal in 2020.
McGibbon said the new investor-led initiative would “only have meaning if HSBC commits to no longer finance the expansion of the fossil fuel industry and phases out its fossil fuel financing in line with the goals of the Paris agreement”.
“Otherwise, this is just HSBC trying to make money from both ends of the climate catastrophe,” he said.
Coal-fired power is a major contributor to the climate crisis and accounts for about a fifth of the world’s greenhouse gas emissions. Alok Sharma, a former UK business secretary and now president-designate of Cop26, said he would make it a “personal priority” to consign coal to history.
The consortium hopes to have a model ready for the UN’s Cop26 climate conference, which is being held in Glasgow in November.
Donald Kanak, the chairman of Prudential’s insurance growth markets, who reportedly devised the idea, told Reuters: “If you can come up with an orderly way to replace those plants sooner and retire them sooner, but not overnight, that opens up a more predictable, massively bigger space for renewables.”
He said the framework had already been presented to finance ministers from the Association of Southeast Asian Nations, the European Commission and European development officials.
A spokesperson for HSBC was not immediately available to comment.