According to the latest IPCC report, the world needs to drastically reduce emissions from coal-fired power plants worldwide. For several months, the United Nations Secretary General, Antonio Guterres, has said the world needs “to make sure that we don’t build more coal power plants after 2020.” He also called for accelerating the closure of existing plants. At the UN Climate Action Summit next week, will businesses and governments step forward with meaningful announcements towards these goals?
The momentum for coal phaseout is growing rapidly. Earlier this month, the Indian states of Gujarat and Chhattisgarh signaled that they would not build any new coal power plants. In Korea and Japan, basically the final stragglers among OECD countries in terms of ending construction of coal plants, citizens recently sued the government to end construction of coal plants.
In the past year, we’ve seen major progress on limiting the development of coal, by utilities, by states, financial institutions and many other stakeholders. Membership in the global Powering Past Coal Alliance includes 30 national governments, 22 sub-national governments, and 31 businesses or organizations. The governments have committed to phasing out coal use in their jurisdictions. Companies like Orsted have committed to shutting down their coal plants (and in the case of Orsted also divesting from their oil and gas assets.) Over 100 global financial institutions have restricted or ended support for coal mining, coal-fired power plants, or related investments. This includes financial institutions from Japan, Singapore and China. This is a major milestone since Asia is a hotspot for investment in new coal-fired power projects. Insurance companies including the US company Chubb are phasing out both investments for coal and insurance policies for companies heavily invested in coal. Funds such as the Norwegian Sovereign Wealth Fund have divested billions from coal. On the government side, multilateral development banks, export credit agencies, and development finance institutions have also exited or restricted coal, recognizing that coal-fired power plants are a hazardous, expensive risk thanks to the rapidly falling costs of alternatives such as wind and solar power. Private banks, such as Morgan Stanley, Citi, Chase, Bank of America, and Bank of America have also announced policies restricting support for coal, though some of these could be strengthened to close loopholes. There is even a newly updated Global Coal Exit List to guide financial institutions on which companies to divest from.
As always, it’s vital to read the policy announcements carefully, as the risk of “greenwashing’ (where companies announce a good policy but there are huge loopholes or problems with real outcomes) is high. There are already justifiable concerns about whether oil and gas companies are engaging in greenwashing by hosting a meeting in NY during climate week, for example, seeking positive press for making relatively small investments to reduce emissions without actually shifting the vast majority of their fossil fuel investments. (Many of these companies are facing fraud investigations and legal challenges for their ongoing, decades-long public misinformation campaigns on climate change.) Similarly, announcements on coal by countries, states, companies and financial institutions will need to be scrutinized to ensure they are serious commitments to phase out coal, not riddled with loopholes for near-term coal projects, for example.
Areas to Watch
Governments and policies on coal: We already know that countries such as Japan and Australia have not been invited to speak at the UN climate summit, likely because of their refusal to decrease their use of coal and ongoing construction of new coal-fired power plants. As developed economies with relatively high per capita emissions, it’s disappointing that neither country is increasing climate ambition, and justifiable that they won’t be given prominent roles at the summit. But what about other nations? Expectation are still high that other countries will come forward with announcements about coal, such as via the Powering Past Coal Alliance. India and China, while relatively low emitters per capita relative to high-income countries, are still planning to build new coal plants domestically. At the same time, both countries are far out in front when it comes to renewable energy development domestically, so expectations are high for potential announcements from India and China that demonstrate their commitment to increasing ambition under the Paris Agreement. We’ve also written for years about the need for countries, primarily China, Japan, and Korea, to stop funding coal projects overseas, though none of the countries have yet signaled they will end support for coal plants overseas at the summit.
Corporate transitions out of coal: Many companies have undergone transformation in recent years, with Xcel Energy in the US announcing that it would phase out its coal plants. On the other hand, we have a company like GE which claimed it is committed to the Paris Agreement, but it is simultaneously lobbying governments in developing nations to build more coal plants. Disturbingly, the coal contracts GE has won are for projects that are projected to be “permanently unprofitable” and motivated primarily by electoral politics in some cases. We just released our issue brief detailing the slew of potentially disastrous coal projects which GE’s board should cancel immediately – and we’re calling on GE to announce by the climate summit that it will end its involvement in these projects. Hopefully they will join with businesses that are seriously committed to the Paris Agreement and shift their portfolio out of fossil fuels and into more zero-carbon technologies.