The Japanese government today announced a $25 million grant for the Energy Transition Mechanism (ETM) partnership initiated by the Asian Development Bank (ADB).

The announcement was made at the launch of the Southeast Asia ETM Partnership amid COP26 in Glasgow by Masato Kanda, Deputy Minister of International Affairs, Ministry of Finance of Japan.

This grant is the first announced seed financing for ETM, which is currently being studied and piloted in Southeast Asia, starting with Indonesia and the Philippines.

“ETM has the potential to have a major impact on cutting greenhouse gas emissions in Asia and the Pacific by accelerating the transition from carbon-intensive energy to clean and reliable energy,” said ADB President Masatsugu Asakawa. “We are very grateful for the support from important partners such as Japan and others who are supporting ETM and taking transformative action in the fight against climate change.”

“Japan emphasizes the importance of transitional financing to achieve the 1.5°C goal, especially in the Asia and Pacific region which relies heavily on coal-fired power generation,” said Masato Kanda. “Therefore, Japan fully supports the innovative ETM, which plays a critical role in smoothing the transition from coal to cleaner energy, while ensuring universal access to affordable and reliable energy. I am confident that our grant contribution will be the start-up fund that can attract much larger contributions from other donors and private investment, so that we can all successfully make the transition with our important partners, including Indonesia and the Philippines.”

ETM is a transformative approach with blended-finance , which seeks to speed up the shutdown time of existing coal-fired power plants, then replace them with clean power generation capacity. This mechanism consists of two financings: The first financing is devoted to early closure or transfer of functions of coal-fired power plants with an accelerated schedule. The second financing focuses on investing in generation, storage and upgrading of the electricity grid for new clean energy. Going forward, it is hoped that multilateral banks, private institutional investors, philanthropic organizations, and long-term investors will provide capital for ETMs.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and Pacific, and continues its efforts to eradicate extreme poverty. Founded in 1966, ADB is owned by 68 members—49 of whom are in the Asia and Pacific region.