Last week, the Global Energy Alliance for People and Planet and the Rockefeller Foundation made a formal statement on the Coal to Clean Credit Initiative, which is supported by South Pole, RMI and the Climate Policy Initiative. This initiative, comprised of a consortium of experts from around the globe, will set up a novel standard for the use of carbon finance to motivate the transition to renewable energy in countries globally.
The Coal to Clean Credit Initiative is set to begin a consultative process this month, establishing a benchmark for carbon-funded coal transition projects. Rockefeller Foundation president, Dr. Rajiv J. Shah, said that developing and emerging nations had the right to create jobs, opportunity and electricity for their citizens without setting off a climate emergency. Shah added that this initiative would help these nations retire these coal plants and replace them with cleaner energy, which would in turn unlock opportunity for people while avoiding millions of tons of CO2 emissions released by every plant.
At the moment, more than 90% of coal plants are protected from competition because of long-term agreements or regulations that guarantee returns. This has resulted in many coal plants having no financial incentives to shut down early.
To help with this, the initiative will design a methodology which will be used to develop a world-first project approach that speeds up the equitable and managed phasing out of the use of coal and incentivization of the partial or full replacement of these plants with clean energy by 2030. Credits will be sold under the initiative, with the revenue generated being offered as incentives for owners of coal plants to shift their courses and invest in renewable energies.
The funds generated will also support the transition of communities and workers away from coal-fired power, which may foster entrepreneurship, new employment opportunities and reskilling.
The Global Energy Alliance for People and Planet and the Rockefeller Foundation plan to present the methodology during COP28 in Dubai.
Currently, the Coal to Clean Credit Initiative is party to a partnership with Indonesia, involving the creation of a road map to generate credits to encourage the phasing out of coal plants. Discussions are underway to enter into similar partnerships with Vietnam and South Africa.
Global Energy Alliance for People and Planet CEO Simon Harford estimates that the cost of renewable energy will be significantly lower in comparison to fossil fuels by 2030. This, Harford argues, will create roughly 25 million secure jobs in Africa and Asia.
Coal extraction enterprises such as Warrior Met Coal Inc. (NYSE: HCC) are likely to keep a keen eye out for the way this credit program could affect the business in the medium- to long-term.
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