Coal combustion – the largest contributor currently to climate change, is facing a phase-out push from a new initiative. The Rockefeller Foundation and Global Energy Alliance for People and Planet (GEAPP) announced the Coal to Clean Credit Initiative (CCCI) – an enterprise that will aim to develop a methodology to use finance from carbon credits to incentivize a transition away from coal power generation.
The initiative will set a new comprehensive standard for the use of carbon finance to incentivize a just transition away from coal-fired power plants to renewable energy in emerging economies. The participants in the enterprise and their supporters – the Climate Policy Initiative (CPI), RMI, and South Pole, will begin running a consultative process to develop the methodology this month and set a global benchmark for carbon-financed coal transition projects.
The aimed deadline is for the Coal to Clean Credit Initiative methodology to be presented during the United Nations Climate Change Conference (COP28) in Dubai with the endorsement of a leading carbon standard.
One of the most important drivers of the initiative is to help developing countries retire coal plants and replace them with cleaner power in a way that ensures jobs and the livelihood of people working in the coal sector and also creates financial incentives for the emerging economies to choose renewable and clean power generation over coal energy.
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Currently, more than 90% of coal plants are shielded from competition due to regulation or long-term contracts to guarantee their returns. That means many coal plants have no financial incentive to retire early and governments have no incentives to replace them with renewables generation right now.
The Coal to Clean Credit Initiative is a response to that problem, aiming to design a methodology that can be used to develop a world-first project approach to accelerate the managed and equitable phase-out of coal plants and incentivize their full or partial replacement with clean power this decade.
The revenue generated from selling the CCCI’s “coal-to-clean” credits could provide incentives for coal plant owners to change course and invest in renewable energy, while also generating funding to support the transition of workers and communities away from coal-fired power.
The initiative has developed a detailed concept, with input from a technical advisory group of leading experts, and identified real-world cases that are most suitable for the generation of coal-to-clean credits. Its target is to start applying the methodology as soon as 2024 to as many coal plants as possible this decade and avoid millions of tons of planned carbon dioxide emissions.
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Coal combustion alone was responsible for 14.98 billion metric tons of CO2 in 2021. There are more than 2,400 operating coal-fired plants globally. According to a new report by US NGO Global Energy Monitor, all of them must be shut down by 2040 and no new plants can open if countries want to meet their Paris Agreement climate goals.
Additionally, an increasing number of research papers that have been coming out in the last few years are showing that new solar and wind energy generation is lower in cost than the cheapest new fossil fuel power, including coal. 99% of the U.S. coal plants are now more expensive than new renewables.
Some few statistics highlight that the 534 GW of renewable capacity added in emerging countries since 2010 at lower costs than the cheapest coal option is reducing electricity costs by around $32 billion every year. Overall, adding renewable projects in developing countries has been proven to reduce costs in the electricity sector for countries and consumers, compared to adding the same amount of fossil fuel-fired generation. The unprecedented rapid decline in the costs of renewables has recently started to give an incentive for governments to switch away from fossil fuels.
“By 2030 the cost of renewables will undercut fossil fuels almost everywhere, enabling an estimated 25 million secure jobs in Asia and Africa alone. GEAPP is proud to support countries such as Indonesia, whose request to participate in the Coal to Clean Credit Initiative will place them at the forefront of energy transition and carbon market development,” said Simon Harford, CEO of GEAPP.
Transitioning away from coal combustion is the first and most urgent step towards mitigating climate change and ensuring a sustainable and livable future on Earth. All coal power plants must be shut down and replaced with viable options. There is no one-size-fits-all solution to replace coal, therefore institutions, industry experts & leaders and governments must come together to prepare individual for each country, sophisticated and feasible plans.
