The initiative targets the significant emissions challenge posed by the world’s coal fleet
[SINGAPORE] Eastspring Investments and Abu Dhabi-based Reviva Transition Partners have collaborated to develop a private equity strategy aimed at phasing out coal-fired power plants across Asia and other emerging markets, in line with climate goals.
Eastspring, which is the asset management arm of Prudential, announced in a statement on Tuesday (Feb 10) that it will use its regional investment networks to source for deals as part of its new strategy.
Reviva said it will provide technical capabilities such as investment restructuring, thermal asset management and coal decarbonisation expertise.
The initiative targets the significant emissions challenge posed by the world’s coal fleet.
According to the World Economic Forum, coal-fired power plants are responsible for roughly 30 per cent of global CO2 emissions, said Eastspring.
While the Paris Agreement goals require a rapid phase-out, coal plants in emerging markets average 15 years of age, suggesting they are currently on track to operate well past 2040.
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“This long remaining life creates a global challenge but also poses a unique opportunity to accelerate coal phase-out by utilising existing infrastructure towards driving energy transition,” Eastspring said.
The partnership is built on the premise that active ownership is the primary driver of meaningful impact in reducing emissions from operating coal assets.
“Despite the trillions committed to climate finance globally, progress in reducing emissions from operating coal assets has been limited,” Eastspring said.
“The few precedents that have delivered meaningful impact share one defining feature: active ownership. By directly managing assets, owners have been able to deliver commercial transitions that balance financial returns and tangible impact,” it added.
The duo will use the Eastspring-Prudential Climate Transition Investment Framework as one of the key foundational approaches for a newly developed coal phase-out framework for private markets, said the statement.
This framework has previously been endorsed by the Climate Bonds Initiative.
Eastspring and Reviva are engaging capital providers and coal asset owners, including utility-scale and captive plants, that “share the commitment to decarbonising operating coal plants in select Asian and global emerging markets jurisdictions”.
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