Financing the coal exit

The report examines 'coal transition credits' (CTCs) as a mechanism to accelerate the phase-out of coal-fired power plants in Southeast Asia. While proponents suggest CTCs can unlock private finance for early retirement and just transition measures, a survey of 10 experts reveals widespread skepticism. Key concerns include the risk of carbon leakage, where retired capacity is replaced by other fossil fuels, and the difficulty of establishing conservative baselines to prove additionality. Experts warn that CTCs could create perverse incentives, rewarding polluters and encouraging the delay of retirements to maximize credit issuance. Furthermore, the report highlights structural barriers in Southeast Asia, such as young coal plant fleets and rigid power purchase agreements, and notes that current methodologies, including Verra's VM0052, may have loopholes regarding 'captive' coal plants. The findings suggest that without rigorous guardrails and a focus on public finance, CTCs risk being a tool for greenwashing rather than a driver of genuine climate impact.

• Current crediting methodologies, such as Verra's VM0052, are criticized for excluding 'captive' coal plants—facilities serving specific industries like nickel or steel—which could allow new coal capacity to replace retired plants.
• The potential for CTCs to support a 'just transition' is seen as highly conditional, requiring strict stipulations that revenues are earmarked for worker retraining and community support to avoid minimal, 'box-ticking' exercises.

APA

Wyburd, I., & Pavia, E. (2025). Financing the coal exit. Carbon Market Watch. https://carbonmarketwatch.org/wp-content/uploads/2025/11/Financing-the-coal-exit-Are-transition-credits-a-hype-or-an-effective-climate-tool-in-Southeast-Asia-1.pdf

Chicago

Wyburd, Inigo, and Edoardo Pavia. Financing the coal exit. Carbon Market Watch, 2025. https://carbonmarketwatch.org/wp-content/uploads/2025/11/Financing-the-coal-exit-Are-transition-credits-a-hype-or-an-effective-climate-tool-in-Southeast-Asia-1.pdf.

Wikipedia

{{cite report |last1=Wyburd |first1=Inigo |last2=Pavia |first2=Edoardo |title=Financing the coal exit |publisher=Carbon Market Watch |date=October 2025 |url=https://carbonmarketwatch.org/wp-content/uploads/2025/11/Financing-the-coal-exit-Are-transition-credits-a-hype-or-an-effective-climate-tool-in-Southeast-Asia-1.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{wyburd2025financing, author = {Wyburd, Inigo and Pavia, Edoardo}, title = {{Financing the coal exit}}, institution = {Carbon Market Watch}, year = {2025}, month = oct, url = {https://carbonmarketwatch.org/wp-content/uploads/2025/11/Financing-the-coal-exit-Are-transition-credits-a-hype-or-an-effective-climate-tool-in-Southeast-Asia-1.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }