12 November 2024 – The Coal Transition Commission (CTC), tasked with developing recommendations for financing early closures of coal plants, has recognized the urgency of ending the construction of new coal plants and for shutting down existing plants while protecting workers, in its first report published at COP29 in Baku today. The report is skeptical about the role that expensive and unproven “abatement” technologies like carbon capture and co-firing coal with other fuels have to play in reducing coal emissions and stresses the need for more public financing for coal phaseouts and the removal of subsidies for coal. But Reclaim Finance argues that the CTC’s support for proposals to raise funds for coal closures by selling carbon offsets is deeply misguided. Offsets are unlikely to generate funds at the scale needed, and any offset transactions would negate the climate benefits from shutting down coal plants.
The CTC, co-chaired by France and Indonesia, was established at COP28 to unlock new sources of public and private financing for coal phaseouts as part of the French government’s Coal Transition Accelerator. (2) The CTC has a valuable role in influencing the coal phaseout policies of governments and financial institutions.
Reclaim Finance commented that while there is much to welcome in the report, its repeated promotion of carbon offsetting as a way to bring more finance into coal phaseouts is deeply concerning.
The CTC’s promotion of carbon credits for financing coal phaseouts is misguided and unfortunate, not least because its recommendations on offsets are the ones that are most likely to be taken up by governments and financial institutions because they serve their interests. They must both resist the trap of this dead-end approach and step up their financing for phaseouts while ramping up investment in sustainable energy.
Paddy McCully, Senior Analyst, Reclaim Finance
The CTC appears mostly skeptical of the role of “abatement” technologies like carbon capture, utilization and storage (CCUS), and co-firing of coal with biomass and ammonia. But the report fails to convincingly make the case against investments in such technologies, including that they would likely increase emissions, and diverting finance from real climate solutions like renewables and storage.
The report misleadingly states that CCUS technology is used widely around the world, when there are only a handful of examples of CCUS at coal plants and these have proven to be expensive failures. (3)
Reclaim Finance urges the CTC to do more work to explain why relying on abatement technologies and offsetting schemes will delay meaningful progress in realizing the climate benefits of coal phaseouts. Reclaim Finance also urges the French government to increase its financing of coal phaseouts and sustainable energy overseas, and for Indonesia to step up its efforts to transition away from coal and toward renewables.
