Image Credits - Central Banking
At New York Climate Week 2024, Gillian Tan, Assistant Managing Director and Chief Sustainability Officer at the Monetary Authority of Singapore (MAS), delivered a powerful speech outlining a “Triple A” market-based approach for transitioning away from coal. Speaking at the MAS-World Bank event on September 26, Tan emphasized the urgent need for innovative solutions to accelerate coal phase-out in emerging economies, where coal remains a dominant source of energy despite its environmental impact.
In her remarks, Tan framed the approach around three key pillars: Ambition, Arsenal and Actors, all of which are crucial for making the coal transition financially viable while supporting economic growth and energy security in developing regions.
Tan highlighted the importance of setting high ambitions, especially in the development of transition credits. These credits, created by reducing emissions through early coal plant retirements and transitioning to cleaner energy, must be of high integrity to attract demand. Singapore’s MAS has been pioneering efforts to make these credits more viable through initiatives like the “Transition Credits Coalition” (TRACTION), a programme launched at COP28 to scale up transactions from pilot phases to more substantial, market-ready frameworks.
The goal, according to Tan, is to close the gap between supply and demand, fostering confidence in these credits as effective tools for driving emissions reduction. TRACTION aims to set robust standards, ensuring that transition credits deliver genuine environmental impact and are recognised across financial markets.
Moving beyond credits, Tan addressed the need for a broader financial “arsenal” to make coal decommissioning feasible. She stressed that high ambitions alone are not enough; innovative financing mechanisms such as blended finance, concessional capital, and technical assistance are essential to de-risk coal transition projects. These tools can help balance the financial and operational complexities involved in shutting down coal infrastructure, particularly in countries where coal plays a significant role in energy production and economic development.