Created in 2017, the Powering Past Coal Alliance (PPCA) brings together states, local governments, financial institutions, and companies to promote the exit from coal. The problem is that not all its members are moving towards this exit. Financial institutions members of the alliance are specially to blame, as the vast majority continue to finance coal, and even its development.
The PPCA has grown considerably, from 23 at its birth in 2017 to 111 members in March 2021. Yet Reclaim Finance’s research – supported by seven international NGOs – shows that this growth has not signified a real movement away from coal. While some members of the Alliance are planning to shut down their power plants in line with the Paris Agreement – i.e. by 2030 in the EU and OECD and 2040 worldwide – others have largely put this ambition on hold.
In fact, only two of the 23 financial institutions in the alliance have adopted a policy that would allow them to exit coal within these timeframes. In contrast, 18 – including Aviva, L&G, CalPERS and Swiss Re – do not restrict funding to companies developing new projects and 8 – including Schroders – have no minimum criteria limiting their support to the sector. The PPCA’s financial members are reported to have $38 billion invested in companies significantly involved in the coal sector listed on the Global Coal Exit List.
While the current principles of the PPCA are insufficient to guarantee the exit from coal necessary to achieve the objectives of the Paris Agreement, the limits of the initiative also stem from the behavior of certain member states, including its co-chairs Canada and the United Kingdom. Indeed, while Canada will close all its power plants by 2030, it is increasing its coal exports and plans to open 13 new mines in Alberta and British Columbia, two regions that are also individual members of the Alliance. On the other side, the United Kingdom is considering the development of a new coal mine. Among the other member states of the alliance, Mexico is planning to open new coal-fired power plants and Germany will continue to use them until 2038.
To truly become the vehicle for a global exit from coal, the PPCA must reform itself, in particular to demand an exit from the entire coal sector – including mines and infrastructure – and to consider the specificities of financial actors. Its members need to align with a coal exit timetable that is truly aligned with the Paris Agreement, which means for financial institutions adopting coal exit policies following the Coal Policy Tool criteria.
COP 26, chaired by the United Kingdom, will be the moment of truth for this alliance and its members: will they dare to shift into a higher gear?