{"id":14513,"date":"2021-08-10T13:43:58","date_gmt":"2021-08-10T11:43:58","guid":{"rendered":"https:\/\/reclaimfinance.org\/site\/?p=14513"},"modified":"2023-02-08T16:13:39","modified_gmt":"2023-02-08T15:13:39","slug":"buying-out-coal-plants-for-climate-goals","status":"publish","type":"post","link":"https:\/\/reclaimfinance.org\/site\/en\/2021\/08\/10\/buying-out-coal-plants-for-climate-goals\/","title":{"rendered":"Buying out coal plants for climate goals?"},"content":{"rendered":"<div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-1 fusion-flex-container nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"--awb-border-radius-top-left:0px;--awb-border-radius-top-right:0px;--awb-border-radius-bottom-right:0px;--awb-border-radius-bottom-left:0px;--awb-flex-wrap:wrap;\" ><div class=\"fusion-builder-row fusion-row fusion-flex-align-items-flex-start fusion-flex-content-wrap\" style=\"max-width:1216.8px;margin-left: calc(-4% \/ 2 );margin-right: calc(-4% \/ 2 );\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-0 fusion_builder_column_1_1 1_1 fusion-flex-column\" style=\"--awb-bg-size:cover;--awb-width-large:100%;--awb-margin-top-large:0px;--awb-spacing-right-large:1.92%;--awb-margin-bottom-large:20px;--awb-spacing-left-large:1.92%;--awb-width-medium:100%;--awb-order-medium:0;--awb-spacing-right-medium:1.92%;--awb-spacing-left-medium:1.92%;--awb-width-small:100%;--awb-order-small:0;--awb-spacing-right-small:1.92%;--awb-spacing-left-small:1.92%;\"><div class=\"fusion-column-wrapper fusion-column-has-shadow fusion-flex-justify-content-flex-start fusion-content-layout-column\"><div class=\"fusion-text fusion-text-1\"><p align=\"justify\"><b><span class=\"TextRun SCXW165675317 BCX0\" lang=\"FR-FR\" xml:lang=\"FR-FR\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW165675317 BCX0\"><u><a class=\"Hyperlink SCXW218492787 BCX0\" href=\"https:\/\/www.reuters.com\/world\/uk\/exclusive-citi-hsbc-prudential-hatch-plan-asian-coal-fired-closures-sources-2021-08-03\/\" target=\"_blank\" rel=\"noreferrer noopener\"><span class=\"TextRun Underlined SCXW218492787 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW218492787 BCX0\" style=\"color: #8ac56b;\" data-ccp-charstyle=\"Hyperlink\">Reuters<\/span><\/span><\/a><\/u><span class=\"TextRun SCXW218492787 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW218492787 BCX0\" style=\"color: #8ac56b;\"> and <\/span><\/span><u><a class=\"Hyperlink SCXW218492787 BCX0\" href=\"https:\/\/www.theguardian.com\/environment\/2021\/aug\/03\/uk-finance-giants-plan-to-buy-out-fossil-fuel-plants-in-order-to-shut-them\" target=\"_blank\" rel=\"noreferrer noopener\"><span class=\"TextRun Underlined SCXW218492787 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW218492787 BCX0\" style=\"color: #8ac56b;\" data-ccp-charstyle=\"Hyperlink\">The Guardian<\/span><\/span><\/a><\/u><span class=\"TextRun SCXW218492787 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW218492787 BCX0\" style=\"color: #8ac56b;\"> have revealed discussions regarding a new scheme purportedly aiming to shut down coal plants in Asia. This initiative, led by the Asian Development Bank (ADB) and British insurance firm Prudential, aims to bring together <\/span><span class=\"NormalTextRun CommentStart SCXW218492787 BCX0\" style=\"color: #8ac56b;\">various players in private finance<\/span><span class=\"NormalTextRun SCXW218492787 BCX0\" style=\"color: #8ac56b;\">. Is this just a case of greenwashing or a real step towards <\/span><span class=\"NormalTextRun CommentStart SCXW218492787 BCX0\" style=\"color: #8ac56b;\">decarbonization of the global energy mix<\/span><span class=\"NormalTextRun SCXW218492787 BCX0\" style=\"color: #8ac56b;\">? <\/span><\/span><span class=\"TextRun SCXW218492787 BCX0\" lang=\"FR-FR\" xml:lang=\"FR-FR\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW218492787 BCX0\" style=\"color: #8ac56b;\">Reclaim Finance <\/span><span class=\"NormalTextRun SpellingErrorV2 SCXW218492787 BCX0\" style=\"color: #8ac56b;\">takes<\/span><span class=\"NormalTextRun SCXW218492787 BCX0\" style=\"color: #8ac56b;\"> a <\/span><span class=\"NormalTextRun SpellingErrorV2 SCXW218492787 BCX0\" style=\"color: #8ac56b;\">closer<\/span><span class=\"NormalTextRun SCXW218492787 BCX0\" style=\"color: #8ac56b;\"> look.<\/span><\/span> <\/span><\/span> <\/b><\/p>\n<p align=\"justify\"><span class=\"TextRun SCXW249124157 BCX0\" lang=\"FR-FR\" xml:lang=\"FR-FR\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW249124157 BCX0\"><span class=\"TextRun SCXW189079929 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW189079929 BCX0\">If the details of the scheme are to be defined in advance of the UN Climate Change Conference (COP26), the limited information available raises<\/span><span class=\"NormalTextRun SCXW189079929 BCX0\"> numerous<\/span><span class=\"NormalTextRun SCXW189079929 BCX0\"> questions which must be answered <\/span><span class=\"NormalTextRun SCXW189079929 BCX0\">to <\/span><span class=\"NormalTextRun CommentStart SCXW189079929 BCX0\">guarantee<\/span><span class=\"NormalTextRun SCXW189079929 BCX0\"> the effectiveness and <\/span><span class=\"NormalTextRun SCXW189079929 BCX0\">credibility<\/span><span class=\"NormalTextRun SCXW189079929 BCX0\"> of <\/span><span class=\"NormalTextRun SCXW189079929 BCX0\">such a<\/span><span class=\"NormalTextRun SCXW189079929 BCX0\"> process.<\/span><\/span><\/span> <\/span><\/p>\n<\/div><\/div><\/div><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-1 fusion_builder_column_1_1 1_1 fusion-flex-column\" style=\"--awb-bg-size:cover;--awb-width-large:100%;--awb-margin-top-large:0px;--awb-spacing-right-large:1.92%;--awb-margin-bottom-large:20px;--awb-spacing-left-large:1.92%;--awb-width-medium:100%;--awb-order-medium:0;--awb-spacing-right-medium:1.92%;--awb-spacing-left-medium:1.92%;--awb-width-small:100%;--awb-order-small:0;--awb-spacing-right-small:1.92%;--awb-spacing-left-small:1.92%;\"><div class=\"fusion-column-wrapper fusion-column-has-shadow fusion-flex-justify-content-flex-start fusion-content-layout-column\"><div class=\"fusion-title title fusion-title-1 fusion-title-text fusion-title-size-one\" style=\"--awb-text-color:#59bc6d;--awb-margin-bottom:15px;--awb-font-size:16px;\"><div class=\"title-sep-container title-sep-container-left fusion-no-large-visibility fusion-no-medium-visibility fusion-no-small-visibility\"><div class=\"title-sep sep- sep-solid\" style=\"border-color:#3e3e3e;\"><\/div><\/div><span class=\"awb-title-spacer fusion-no-large-visibility fusion-no-medium-visibility fusion-no-small-visibility\"><\/span><h1 class=\"fusion-title-heading title-heading-left fusion-responsive-typography-calculated\" style=\"margin:0;font-size:1em;--fontSize:16;--minFontSize:16;line-height:1.4;\"><b><span class=\"EOP SCXW92594171 BCX0\" data-ccp-props=\"{\"><span class=\"TextRun SCXW200963185 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW200963185 BCX0\">Greenwashing by the biggest c<\/span><span class=\"NormalTextRun SCXW200963185 BCX0\">oal<\/span><span class=\"NormalTextRun SCXW200963185 BCX0\">\u00a0funders<\/span><\/span><span class=\"EOP SCXW200963185 BCX0\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/span><\/b><\/h1><span class=\"awb-title-spacer\"><\/span><div class=\"title-sep-container title-sep-container-right\"><div class=\"title-sep sep- sep-solid\" style=\"border-color:#3e3e3e;\"><\/div><\/div><\/div><div class=\"fusion-text fusion-text-2\"><p align=\"justify\"><span data-contrast=\"auto\">Perhaps the biggest flaw in this initiative is the profile of the financial institutions reported as potential stakeholders, the banks Citi and HSBC and asset manager BlackRock, through its subsidiary BlackRock Real Assets. <b>These are some of the biggest financial supporters of fossil fuel companies, including those which are active in the coal market.<\/b><\/span><b> <\/b><\/p>\n<p align=\"justify\"><span data-contrast=\"auto\">Citi is the fourth largest lender in the world to companies developing new coal-fired plants, and <\/span><u><a href=\"https:\/\/coalexit.org\/sites\/default\/files\/download_public\/Financing%20GCEL%202020_Press%20Release_urgewald.pdf\" target=\"_blank\" rel=\"noopener\"><span data-contrast=\"none\">BlackRock is their second largest investor<\/span><\/a><\/u><span data-contrast=\"auto\">. Alongside <\/span><u><a href=\"https:\/\/reclaimfinance.org\/site\/wp-content\/uploads\/2021\/05\/City_Of_Coal_UK_Finance_Report.pdf\" target=\"_blank\" rel=\"noopener\"><span data-contrast=\"none\">Prudential, who are leading this project, and HSBC<\/span><\/a><\/u><span data-contrast=\"auto\">, they are amongst <\/span><u><a href=\"https:\/\/coalpolicytool.org\/\" target=\"_blank\" rel=\"noopener\"><span data-contrast=\"none\">the financial institutions with the worst policies in the coal sector<\/span><\/a><\/u><span data-contrast=\"auto\">. If these companies genuinely wish to contribute to the fight against climate change, they must do a lot better than simply painting themselves as firefighters on hand to put out the fire over the next <\/span><i><span data-contrast=\"auto\">fifteen<\/span><\/i><span data-contrast=\"auto\"> years. <b>They should focus first and foremost on no longer lighting fires themselves by refusing to fund the companies who are building new coal plants.<\/b><\/span><\/p>\n<\/div><div class=\"fusion-title title fusion-title-2 fusion-title-text fusion-title-size-two\" style=\"--awb-text-color:#59bc6d;--awb-margin-top:10px;--awb-margin-bottom:15px;--awb-font-size:16px;\"><div class=\"title-sep-container title-sep-container-left fusion-no-large-visibility fusion-no-medium-visibility fusion-no-small-visibility\"><div class=\"title-sep sep- sep-solid\" style=\"border-color:#3e3e3e;\"><\/div><\/div><span class=\"awb-title-spacer fusion-no-large-visibility fusion-no-medium-visibility fusion-no-small-visibility\"><\/span><h2 class=\"fusion-title-heading title-heading-left fusion-responsive-typography-calculated\" style=\"margin:0;font-size:1em;--fontSize:16;--minFontSize:16;line-height:1.5;\"><p><b><span class=\"EOP SCXW108405599 BCX0\" data-ccp-props=\"{\"><span class=\"TextRun SCXW134531972 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW134531972 BCX0\">Planned closure for coal\u2026 or a reprieve?<\/span><\/span><span class=\"EOP SCXW134531972 BCX0\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/span><br \/>\n<\/b><\/p><\/h2><span class=\"awb-title-spacer\"><\/span><div class=\"title-sep-container title-sep-container-right\"><div class=\"title-sep sep- sep-solid\" style=\"border-color:#3e3e3e;\"><\/div><\/div><\/div><div class=\"fusion-text fusion-text-3\"><p align=\"justify\"><span data-contrast=\"auto\">To limit global warming below 1.5\u00b0C, all coal plants must close by 2030 in European and OECD Member countries, and by 2040 for the rest of the world. On paper, this project seems to match up to climate science, as it aims to close plants over the next 15 years, i.e. before 2040. However, on closer inspection, the IEA\u2019s recent scenario highlights the importance of fast-tracking the closure of the least energy efficient plants before 2030. In 2020, across all Asian countries, the majority of plants made use of the most polluting technology, termed \u2018subcritical\u2019. Is this initiative going to prioritise the closure of subcritical plants and if so, will they be closed by 2030?<\/span><\/p>\n<p align=\"justify\"><span data-contrast=\"auto\">The <\/span><b><span data-contrast=\"auto\">alternative is that this project will actually offer a lifeline to these highly polluting plants by allowing them to remain profitable for longer<\/span><\/b><span data-contrast=\"auto\">. It <\/span><u><a href=\"https:\/\/www.irena.org\/newsroom\/pressreleases\/2021\/Jun\/Majority-of-New-Renewables-Undercut-Cheapest-Fossil-Fuel-on-Cost\" target=\"_blank\" rel=\"noopener\"><span data-contrast=\"none\">is important to remember that operating coal plants is no longer profitable<\/span><\/a><\/u><span data-contrast=\"auto\"> in the majority of the world due to the rapid development of renewable energy sources. While the evolution of this market could push the companies running coal plants to close them in the face of cheaper competitors, these plants are currently set to continue running for the next 15 years. This is therefore more of a delay than a planned closure.<\/span><\/p>\n<\/div><div class=\"fusion-title title fusion-title-3 fusion-title-text fusion-title-size-two\" style=\"--awb-text-color:#59bc6d;--awb-margin-top:10px;--awb-margin-bottom:15px;--awb-font-size:16px;\"><div class=\"title-sep-container title-sep-container-left fusion-no-large-visibility fusion-no-medium-visibility fusion-no-small-visibility\"><div class=\"title-sep sep- sep-solid\" style=\"border-color:#3e3e3e;\"><\/div><\/div><span class=\"awb-title-spacer fusion-no-large-visibility fusion-no-medium-visibility fusion-no-small-visibility\"><\/span><h2 class=\"fusion-title-heading title-heading-left fusion-responsive-typography-calculated\" style=\"margin:0;font-size:1em;--fontSize:16;--minFontSize:16;line-height:1.5;\"><p><b><span class=\"EOP SCXW215452885 BCX0\" data-ccp-props=\"{\"><span class=\"TextRun SCXW146638209 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW146638209 BCX0\">W<\/span><span class=\"NormalTextRun SCXW146638209 BCX0\">ill this\u00a0<\/span><span class=\"NormalTextRun SCXW146638209 BCX0\">benefit the climate?<\/span><\/span><span class=\"EOP SCXW146638209 BCX0\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/span><br \/>\n<\/b><\/p><\/h2><span class=\"awb-title-spacer\"><\/span><div class=\"title-sep-container title-sep-container-right\"><div class=\"title-sep sep- sep-solid\" style=\"border-color:#3e3e3e;\"><\/div><\/div><\/div><div class=\"fusion-text fusion-text-4\"><p align=\"justify\"><span data-contrast=\"auto\">What controls are in place to ensure that this project is really going to reduce the quantity of CO2 emissions produced? There is a risk that plant operators will make up for the shortened timeframe available for exploitation by running the plants more intensively over the next 15 years \u2013 essentially nullifying any perceived reduction in CO2 levels.<\/span><\/p>\n<p align=\"justify\"><span data-contrast=\"auto\">There is also the question of the earnings to be gained by the coal assets\u2019 current owners upon resale. Will this income support the energy transition or in fact slow it? There is a <\/span><b><span data-contrast=\"auto\">risk that these companies, often big players in the energy market, will use this resale money to keep investing in fossil fuels<\/span><\/b><span data-contrast=\"auto\"> \u2013 in gas plants or even, potentially, other coal-fired plants with an eye to benefiting once again from the resale mechanism. The <\/span><b><span data-contrast=\"auto\">ADB must therefore put controls in place to prevent this kind of perverse result.<\/span><\/b><\/p>\n<\/div><div class=\"fusion-title title fusion-title-4 fusion-title-text fusion-title-size-two\" style=\"--awb-text-color:#59bc6d;--awb-margin-top:10px;--awb-margin-bottom:15px;--awb-font-size:16px;\"><div class=\"title-sep-container title-sep-container-left fusion-no-large-visibility fusion-no-medium-visibility fusion-no-small-visibility\"><div class=\"title-sep sep- sep-solid\" style=\"border-color:#3e3e3e;\"><\/div><\/div><span class=\"awb-title-spacer fusion-no-large-visibility fusion-no-medium-visibility fusion-no-small-visibility\"><\/span><h2 class=\"fusion-title-heading title-heading-left fusion-responsive-typography-calculated\" style=\"margin:0;font-size:1em;--fontSize:16;--minFontSize:16;line-height:1.5;\"><p><b><span class=\"EOP SCXW215452885 BCX0\" data-ccp-props=\"{\"><span class=\"EOP SCXW146638209 BCX0\" data-ccp-props=\"{\"><span data-contrast=\"auto\">More renewable energy?<\/span><span data-ccp-props=\"{\">\u00a0<\/span><\/span><\/span><br \/>\n<\/b><\/p><\/h2><span class=\"awb-title-spacer\"><\/span><div class=\"title-sep-container title-sep-container-right\"><div class=\"title-sep sep- sep-solid\" style=\"border-color:#3e3e3e;\"><\/div><\/div><\/div><div class=\"fusion-text fusion-text-5\"><p align=\"justify\"><span data-contrast=\"auto\">According to Prudential, this project would open up more space for renewable energy, though it is too early to confirm this. The initiative, in principle, looks to allocate funds raised by the financial players to an investment fund for renewable energy. Although this is a good idea on paper, it will <\/span><b><span data-contrast=\"auto\">only be good news if the renewable energy projects benefitting would not have already secured capital in the market<\/span><\/b><span data-contrast=\"auto\"> without the scheme.<\/span><\/p>\n<p align=\"justify\"><span data-contrast=\"auto\">State intervention would be appropriate if this attracted private actors to projects whose social and environmental nature brings with it an additional cost or risk. With the lack of clarity surrounding the quality of financed projects, this initiative could end up paying private operators to develop assets in the renewable market which they would have developed in any case to make a profit.<\/span><\/p>\n<\/div><div class=\"fusion-title title fusion-title-5 fusion-title-text fusion-title-size-two\" style=\"--awb-text-color:#59bc6d;--awb-margin-top:10px;--awb-margin-bottom:15px;--awb-font-size:16px;\"><div class=\"title-sep-container title-sep-container-left fusion-no-large-visibility fusion-no-medium-visibility fusion-no-small-visibility\"><div class=\"title-sep sep- sep-solid\" style=\"border-color:#3e3e3e;\"><\/div><\/div><span class=\"awb-title-spacer fusion-no-large-visibility fusion-no-medium-visibility fusion-no-small-visibility\"><\/span><h2 class=\"fusion-title-heading title-heading-left fusion-responsive-typography-calculated\" style=\"margin:0;font-size:1em;--fontSize:16;--minFontSize:16;line-height:1.5;\"><p><b><span class=\"EOP SCXW215452885 BCX0\" data-ccp-props=\"{\"><span class=\"EOP SCXW146638209 BCX0\" data-ccp-props=\"{\"><span data-ccp-props=\"{\">Who will benefit from this scheme?\u00a0<\/span><\/span><\/span><br \/>\n<\/b><\/p><\/h2><span class=\"awb-title-spacer\"><\/span><div class=\"title-sep-container title-sep-container-right\"><div class=\"title-sep sep- sep-solid\" style=\"border-color:#3e3e3e;\"><\/div><\/div><\/div><div class=\"fusion-text fusion-text-6\"><p align=\"justify\"><span data-contrast=\"auto\">Reuters\u2019 article accurately outlines the main beneficiaries of this project. The <\/span><b><span data-contrast=\"auto\">lion\u2019s share of financial risks associated with the project would be taken on by the development banks<\/span><\/b><span data-contrast=\"auto\">, while private companies and investors will be attracted to participate in the scheme, as they will likely benefit from it economically and financially.<\/span><\/p>\n<p align=\"justify\"><span data-contrast=\"auto\">What of the employees and the employment market surrounding these plants? Nothing has been stated regarding the support which will be necessary for the conversion, nor regarding who will take on this responsibility. For the moment, there has also been no detail on the state of play of the resale, nor who will pay the bill for the pollution caused by the operation of the plants.<\/span><\/p>\n<p align=\"justify\"><b><span style=\"color: #8ac56b;\" data-contrast=\"auto\">In conclusion, it is too early to ascertain the effectiveness of this process, though one thing is certain: the financial players involved have not had a Damascene conversion to the cause of protecting the climate. Their communications using their involvement in the scheme to cast a favourable light on their climate commitments can only be interpreted as a vast greenwashing exercise, as long as they continue to financially support the expansion of the coal market.<\/span><\/b><\/p>\n<\/div><\/div><\/div><\/div><\/div>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":28,"featured_media":9175,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[222],"tags":[402,1329,617,257,971],"acteurs_financiers":[],"thematique":[2421,2423],"webinar_type":[],"programme":[],"class_list":["post-14513","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog_en","tag-blackrock-en","tag-citi","tag-climate","tag-coal-exit-plan","tag-hsbc","thematique-coal","thematique-fossil-fuels"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Buying out coal plants for climate goals? - Reclaim Finance<\/title>\n<meta name=\"description\" content=\"A new mechanism by private finance institutions aims to accelerate the closure of coal-fired power plants in Asia. 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