David Young: Pinsent Masons at forefront of major green transition project
As COP26 draws to a close today and Glasgow bids farewell to international leaders, business leaders and global environmental campaigners, we have to hope that the commitments made over the last two weeks will be delivered in full (or exceeded) and to the agreed timescales, writes David Young.
More than 40 countries have committed to phasing out coal-fired power stations, a vitally important initiative to limit global heating to 1.5C above pre-industrial levels. But how will governments and financial institutions deliver on these commitments and what will they need to do to facilitate the decommissioning and closing of these plants?
Pinsent Masons is helping nations navigate these challenges. The Asian Development Bank (ADB) announced at COP26 that it has appointed the firm to advise on a feasibility study to phase out coal-fired power plants across South East Asia.
The establishment of an Energy Transition Mechanism (ETM) will accelerate the retirement of coal-fired power plants, allowing countries to switch to renewable energies. It is projected to be significant both from a regional and global perspective and could result in savings of 2Gt of carbon emissions, the equivalent of removing more than 55 million passenger cars from the road or planting over 2 billion trees (covering an area half the size of Scotland).
The first phase will look to structure the ETM and provide a financial incentive to help accelerate the retirement of coal-fired power plants in Indonesia, Vietnam and the Philippines. The study will identify ways to acquire assets, how to deal with the plants when they are retired, restoration requirements and how carbon credits may be used. In the absence of a tailored ETM, the chances of achieving net zero within the required timeline are significantly reduced.
A Pinsent Masons team led by Hong Kong-based energy partner John Yeap, Ian Warner in London and myself in Edinburgh, will provide specialist legal funds and structuring advice to ADB, as well as advice on energy regulatory and decommissioning considerations.
Through supporting ADB, we are delighted to play a role in delivering not just on meaningful carbon abatement, but also ensuring a just transition for all stakeholders, including communities that will be impacted by it. Collaborating with other advisers, including KPMG and Mott McDonald, we will deliver to ADB a solution that is financially robust, but also meets complex and strict energy regulatory considerations regardless of where in Asia the plant is located.
The ETM has the potential to provide a valuable blueprint for other countries who will also be looking at overhauling their fossil fuel industries as the world comes together to tackle the climate crisis. The scheme draws on global financial, technical and legal experience in analogous matters and repurposes that expertise to create this blueprint.
As a Scottish based lawyer, it’s a privilege to be part of a team working on an international project – one of the biggest climate commitments to date – with real potential to have a material impact in reducing emissions.
David Young is a partner at Pinsent Masons