Singapore Regulator Launches Consultation on Coal Phase-Out Criteria

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

In a statement, the MAS said the consultation aims to provide a credible standard to increase participation in projects for the early retirement of CFPPs that are aligned with a 1.5 degrees Celsius (1.5°C) transition pathway. Interested parties are invited to submit their comments by 28 July 2023, the MAS said.

The early phase-out of CFPPs is critical to the energy transition of the Asia-Pacific region the financial regulator said, where coal accounts for nearly 60% of power generation and about a third of greenhouse gas (GHG) emissions, and where CFPPs have relatively long remaining lifespans.

The Singapore-Asia Taxonomy sets Technical Screening Criteria that apply to the CFPP facility (facility level) as well as to the CFPP owner (entity level).

The Technical Screening Criteria are aligned to global science-based 1.5oC-aligned decarbonisation pathways and take into consideration other guidance including the ASEAN Taxonomy, and the ‘The Managed Phaseout of High-Emitting Assets’ report by the Glasgow Financial Alliance for Net Zero (GFANZ).

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 (IEA) on what is consistent with a 1.5oC-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.