The Net-Zero Asset Owner Alliance (1) recently released its position paper on thermal coal. The alliance acknowledges that early retirement of existing coal power assets by 2030 in OECD countries and by 2040 globally is crucial for achieving net-zero emissions globally by 2050. Yet, the position paper supports the building of almost 200 GW of new coal capacity. The $5.0 trillion Alliance should quickly fill this gaping hole in its policy, or risk shredding its credibility as a science-based initiative.

  • The thermal coal position paper states that “no further thermal coal power plants should be financed, insured, built, developed or planned” and calls for “a phase-out of all unabated existing coal-fired electricity generation”. Yet also says that coal plants currently under active construction should continue (2).
  • The outcome is outrageous, shocking and illogical. The phase-out should clearly start with plants that haven’t been fully built. Yet, the Global Coal Plant Tracker shows that the Alliance is accepting the construction of 211 new coal plants, for a total of 189.8 GW of power capacity. That is more than 4 times Germany’s current coal fleet, whose related air pollution caused the premature death of more than 4,200 people in 2016.

This illustrates the conservatism and inconsistency of the Alliance’s coal paper which itself cites the IPCC’s “middle of the road” scenario indicating that thermal coal use needs to be cut 75% by 2030. Supporting the construction of such massive new coal power capacities is shooting ourselves in the foot as the UN Intergovernmental Panel on Climate Change warned we have a window of just 10 years to keep global warming to 1.5°C. New coal plants are not built for a few years but for decades, and these 211 new coal plants will run far beyond the 2030 and 2040 deadlines the Alliance acknowledges for exiting the sector.

  • One of the projects listed as “under construction” by the tracker is the Turow lignite expansion project by PGE in Poland. Despite failed investments into coal power plants, which threaten to cause the company to go bankrupt by the end of 2021, PGE pursue the building of an additional 450 MW lignite power unit to its current 1,300 MW plant and expand its associated open-pit mine. The mine is situated on the Polish-Czech-German border and withdraws 30 liters of water per second, leaving villages dry and threatening groundwater reserves in the entire region. Its expansion is so much contested that Czech Republic submitted a formal complaint to the EU Commission against the Turów lignite mine because of the impact that the mine would have on the population’s drinking water.

These simple facts make it difficult to understand how an Alliance which might have made the most ambitious climate pledge can fail so completely the litmus test for avoiding climate chaos: stopping new coal.

  • Many of the projects listed under construction in the Global Coal Plant Tracker are at a very early stage. A first hole in the ground, a simple fence around a building site would qualify a project as under construction. Moreover, not only is it quite usual for projects that are “already” under construction to be canceled; it would also be the wisest business decision to make.
  • The Alliance’s thermal coal position paper acknowledges Carbon Tracker’s research and notes that “in 2018, 42% of the global thermal coal operating fleet were unprofitable. By 2030, about half of the global thermal coal capacity could be loss-making, and by 2040, 72% will be unprofitable. With a 2°C scenario, it is likely that investors and governments will face over USD 267 billion in negative stranded assets. This number will be much higher under a 1.5C scenario.”

The definition of insanity is doing the same thing over and over again, but expecting different results. New coal plants will not bring us to a 1.5°C world but the Net-Zero Asset Owner Alliance still thinks it can.

The Alliance should show it listens to feedback, hear the message that its new policy is scientifically insufficient and internally illogical, and urgently release an update which plugs the “plants under active construction” loophole.


  1. The Alliance pledged to adopt science-based targets in order to transition investment portfolios to net-zero GHG emissions by 2050 consistent with a maximum temperature rise of 1.5°C above pre-industrial temperatures.
  2. The Alliance uses the Global Coal Plant Tracker to identify the status of the development of coal plants. In particular, it refers to the category “construction” of the tracker to identify the projects whose completion is accepted by the Alliance.

To go further

  • The Alliance fails to make the case for divestment and still naively focuses on engagement strategies exclusively. Engagement has been the backbone of the Alliance since its launch in 2019 and we acknowledge that engagement can be an effective tool for change when based on time-bound specific demands and associated with an escalation process leading to divestment when engagement fails. However, dialoguing with companies that are still planning the development of new coal projects five years after the adoption of the Paris Agreement is a waste of time. A robust engagement strategy requires a lot of resources and no investor, even when pooling its resources with others through joint initiatives, can effectively engage all companies of its portfolio. We believe that the Alliance’s members should devote their engagement resources to convincing coal companies with no expansion plans to adopt Paris-aligned and asset-based coal exit strategies.
  • It remains unclear how and whether the Alliance members will align their practices with this statement. According to the Coal Policy Tool, only 6 of its members do exclude some companies with coal expansion plans from their investment universe, and 5 have planned to exit coal by 2040 globally at the latest. Some of the AOA’s members, for example, CalPERS have an extremely weak exclusion policy and an equally weak engagement policy.
  • The Alliance exclusively refers to the Global Coal Plant Tracker to identify the projects that are in the pre-construction phase or under construction. The tracker only covers coal plants and it remains unclear what database the Alliance members will use to identify the coal mines or coal infrastructures. Moreover, the tracker lists projects while investors invest in companies. It is also unclear how the members will use the tracker to operationalize the Alliance’s thermal coal position, particularly in the case of joint ventures.
  • Read our consultation response to the “target setting protocol” of the NZAOA.