ACEN’s divestment from the South Luzon coal-fired plant in the Philippines is billed as an energy transition financing, although it is not part of the ADB’s official ETM programme. Despite appearing to follow some of the principles of the ETM, the transaction’s structure is a little opaque and questions remain about the suitability of South Luzon for retirement before other plants.Asia-Pacific’s breakneck economic growth and plentiful coal reserves have combined to make the region one of the toughest nuts to crack in decarbonising the global electricity sector. So the launch in 2021 of a financial platform that would accelerate the retirement of coal plants in Asia attracted cautious support from NGOs and investors.The ADB launched the Energy Transition Mechanism (ETM) at the COP26 summit in Edinburgh, building on a concept developed by Prudential and supported by Citi and HSBC. The concept involves impact-motivated investors buying coal-fired capacity from generators and utilities, with the sellers using the proceeds to invest in renewables and the buyers promising to retire the coal capacity early.The proposal looked particularly suited to coal-heavy markets like the Philippines, Vietnam, Indonesia, India and China, and the Philippines got to market first. ACEN, a listed power producer controlled by local conglomerate Ayala, announced a PHP13.7 billion refinancing of its 244MW South Luzon coal plant. Proceeds of the refinancing would be used to pay down PHP9.8 billion in outstanding debt and redeem its equity investment in the project company, South Luzon Thermal Energy Corporation (SLTEC).The refinancing, led by local banks BPI and RCBC, was described as “adopting the principles” of the ETM, and was accompanied by approving comments from the ADB. ACEN’s announcement noted that the Philippines, Indonesia and the ADB had launched an ETM platform at COP26. The transaction, said ACEN, would enable the retirement of South Luzon by 2040, 15 years ahead of schedule, and allow ACEN’s portfolio to reach 100% renewables by 2025.