Fair Finance Asia Report Calls for End to Coal Financing Across Five ASEAN Countries

Fair Finance Asia and Influencing Just Energy Transition in the ASEAN have released a report calling on banks and investors to stop financing coal expansion across the region and strengthen social safeguards for workers and communities affected by the transition. The report, titled Phasing out Coal, Phasing in Justice, assesses coal transition progress across Cambodia, Indonesia, Laos, the Philippines and Thailand, alongside ASEAN more broadly, concluding that existing measures including coal moratoriums, updated national climate commitments, early-retirement plans and green taxonomies still fall short of a Paris-aligned 1.5°C pathway.

 

Why the Report Argues Existing Policy Measures Fall Short

 

According to Fair Finance Asia, ASEAN member states have introduced a range of transition-oriented policies, including coal moratoriums restricting new plant approvals, updated Nationally Determined Contributions under the Paris Agreement, early-retirement schedules for existing coal-fired plants, green taxonomies classifying which investments qualify as environmentally sustainable, and carbon pricing mechanisms. The report's central finding is that this collection of measures, while representing genuine policy movement, does not collectively add up to a trajectory consistent with limiting global warming to 1.5 degrees Celsius, the threshold widely used as the benchmark for avoiding the most severe climate impacts.

That gap between individual policy measures and an aggregate emissions trajectory is a common finding across climate policy analysis globally, since governments frequently adopt measures that represent progress relative to a prior baseline without necessarily accumulating into the scale of change required by the most demanding climate targets, particularly in economies where coal remains deeply embedded in existing power generation infrastructure and economic planning.

 

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Why the Report Singles Out LNG as a "False Solution"

 

A specific concern the report raises is that international coal finance restrictions have expanded even as funding continues flowing through corporate lending and upstream mining investments, channels that may fall outside the scope of restrictions targeting coal-fired power plants specifically. Simultaneously, the report argues liquefied natural gas is being positioned as a transitional bridge fuel despite carrying high costs, price volatility, stranded asset risk, and the potential to lock economies into continued fossil fuel dependence for decades through long-lived infrastructure investment.

That critique of LNG as a bridge fuel mirrors a genuinely contested debate visible elsewhere in current energy policy discussion, where proponents argue gas offers a lower-carbon transitional step away from coal while critics warn that building new gas infrastructure risks becoming a decades-long commitment that delays the more complete transition to renewable energy the climate math actually requires. The report's recommendation explicitly to end financing for "false solutions" reflects the advocacy coalition's position that gas-based transition pathways function as a delay mechanism rather than genuine progress, a characterisation industry and some government voices would likely dispute given gas's lower direct emissions relative to coal combustion.

 

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Why the AI and Digital Demand Provision Stands Out

 

Among the report's specific recommendations, one explicitly targets new coal development driven by artificial intelligence and digital infrastructure demand, calling for no new coal development for these purposes specifically. That provision connects directly to a tension visible elsewhere in current energy and technology coverage, where surging AI-driven electricity demand has prompted some technology companies to pursue new fossil fuel generation, including new gas plants, to guarantee reliable power at the pace data centre construction now requires, a dynamic that has drawn scrutiny when it conflicts with those same companies' stated climate commitments.

Applying that same concern to coal specifically in the ASEAN context suggests the report's authors anticipate rising electricity demand from data centres and AI infrastructure could become a justification for new coal capacity in the region, a possibility the report seeks to foreclose explicitly rather than treat as a hypothetical future risk.

 

Why Social Safeguards Sit Alongside the Emissions Recommendations

 

The report's recommendations extend well beyond emissions reduction into specific social protections: income support, reskilling and decent green jobs for workers displaced by coal plant closures; free, prior and informed consent and secure land rights for Indigenous Peoples affected by transition-related projects; gender-responsive policies; and protection of civic space and environmental and human rights defenders. Fair Finance Asia's Bernadette Victorio framed the ultimate test of a just transition not merely as whether coal plants close, but whether the broader transition reduces inequality by protecting the rights of workers, communities, women and Indigenous Peoples throughout the process.

That framing positions the report within a broader "just transition" movement in climate policy, which argues that decarbonisation efforts that ignore the economic and social disruption faced by coal-dependent workers and communities risk generating political backlash and social harm even while achieving emissions targets, making social safeguards a practical as well as ethical component of a durable coal phase-out rather than a separate add-on consideration.

 

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What Comes Next

 

The report's release is tied to the ASEAN Plan of Action for Energy Cooperation covering 2026 to 2030, which Oxfam's Shubert Ciencia said signals the bloc's intent to accelerate decarbonisation while maintaining energy security, arguing member states must now restrict investment in existing coal projects and prohibit new ones to make good on that stated intent. Whether ASEAN governments and regional financial institutions adopt the report's specific recommendations, including ending financing for LNG framed as a bridge fuel and restricting coal development tied to AI infrastructure demand, will determine how much this advocacy effort translates into genuine policy change across the five countries it examines.

 

Source: Fair Finance Asia (FFA)