2 December 2023 – Reclaim Finance, the Centre for Environmental Rights (CER) and Center for Energy, Ecology and Development (CEED), cautiously welcome today’s announcement at COP28 of a multilateral initiative designed to bring an end to the construction of new coal plants (1). The initiative is also supposed to channel financing towards the early phaseout of coal power and the accelerated build out of renewables. But the NGOs warned that the governments and organizations behind today’s announcement must ensure their promises are fully delivered, and that coal is phased out without being replaced by high-emission technologies like gas, biomass, or blue hydrogen.
The “Coal Transition Accelerator”, led by France, the USA, and the EU in partnership with countries like Indonesia and Vietnam, includes a potential new “gold standard” with the OECD and International Energy Agency asked to assess climate and financial risks attached to private sector investments in new coal assets.
Danielle Koh, Policy Analyst at Reclaim Finance said:
“The call to action has the potential to be a significant step forward in global efforts to end the financing and construction of new coal power plants, and to accelerate the retirement of existing plants. But breaking the logjam on coal retirements will require developed countries, their banks and investors to walk the talk and provide large amounts of concessional finance as part of their historical responsibilities to help developing countries mitigate climate change.”
Leanne Govindswamy, a lawyer at CER said:
“The Coal Transition Accelerator must assess mechanisms to phaseout the entire coal value chain, including thermal and metallurgical coal, captive coal power, and coal mines. It needs to assess how adequate financing can be made available at concessional terms that do not worsen national debt burdens, and how to ensure that phaseouts are transparent and participative, protect the rights of workers and provide reparations to communities harmed by decades of coal exploitation.”
Reclaim Finance, CER and CEED, are among the 12 NGOs who yesterday published a set of guiding principles on finance for coal retirement mechanisms (CRMs) such as the Just Energy Transition Partnerships and the Asian Development Bank’s Energy Transition Mechanisms.(1) The principles aim to ensure that CRMs are aligned with 1.5°C and protect workers and the rights of communities dependent upon and impacted by coal extraction and burning. The principles state that power lost due to coal plant closures must be replaced by sustainable renewables and energy efficiency, and that tradeable carbon offsets should not be used to finance CRMs.
Gerry Arances, Executive Director at CEED said:
“Coal retirement mechanisms must avoid false solutions such as retrofitting plants with carbon capture and storage and promoting high-emission alternatives such as methane gas and blue hydrogen. While it is positive to see governments and financial institutions committing to a rapid phaseout of coal, we must ensure that this will not enable a detour to new oil and gas projects, especially considering that Southeast Asia is fast becoming a gas hub.”
Major private financial institutions most notably in Japan and the US remain heavily invested in the financing of coal globally. According to the Coal Policy Tracker, which assesses financial institutions against what is needed in a robust coal policy, 84% of financial institutions assessed have not committed to exiting thermal coal by 2030 in Europe and OECD countries, and 2040 worldwide. Only 8 members of the Glasgow Financial Alliance for Net Zero assessed under the Coal Policy Tracker have a robust coal policy in terms of no expansion, and an exclusion of new thermal mines, plants, and infrastructure.
Lucie Pinson, Executive Director at Reclaim Finance said:
“Assuming that any early coal retirement under this initiative would rely on replacement with renewables and not lead to gas conversions, we welcome this announcement. But we need to be careful that it does not provide counter-productive carbon credits which would incentivize private stakeholders not to reduce carbon in other sectors. Nevertheless, we are used to such high-level pledges that are never fully delivered. The challenge will be to make sure that countries adhere to their promises and regulate financial institutions to stop financing coal. While we welcome French leadership in this overall initiative, we recall the commitment taken five years ago by the French economy minister Bruno Le Maire about legislating to secure the adoption of coal phaseout policies by all French financial institutions – a pledge that has never been followed in practice.” (3)
- Danielle Koh, Policy Analyst at Reclaim Finance, , +65 91128010
- Helen Burley, International media at Reclaim Finance, , +44 7703 731923.
- Leanne Govindsamy, Attorney and Head of Program: Corporate Accountability and Transparency, Center for Environmental Rights,
- Aryanne De Ocampo, Center for Energy, Ecology, and Development, , +639295940057 (WA, Signal, Viber)
- Bloomberg, COP28 Latest: Tripling Renewables Is a ‘Done Deal,’ IRENA Says, 2 December 2023
- The concept of Just Energy Transition Partnerships was first announced at COP26 in 2021 for South Africa. This has since been followed by similar announcements for Indonesia, Vietnam, and Senegal.
- See Reclaim Finance, 4 years later, the Paris financial center is not done with coal, 12 July 2023