No traction: offsets won’t deliver the climate benefits of coal phaseouts

The Monetary Authority of Singapore (MAS) and McKinsey have proposed using 'transition credits' (carbon offsets) to attract finance for the early retirement of coal plants in Asia. Reclaim Finance argues that this approach replicates the failures of the broader offset industry, specifically regarding the inability to prove 'additionality' and the risk of inflated emission reduction estimates. The document asserts that offsets create perverse incentives that may deter governments from enacting national coal phaseout policies or providing concessional finance. It concludes that a successful transition requires increased public concessional funding and accelerated investment in sustainable power alternatives rather than a reliance on tradeable offsets.

• The Monetary Authority of Singapore (MAS) is promoting the Transition Credits Coalition (TRACTION), a scheme designed to generate funding for retiring Asian coal plants by selling carbon offsets representing estimated emission reductions.
• The TRACTION scheme relies on the concept of 'additionality'—the claim that emission reductions would not have occurred without offset income—which the document argues is impossible to prove definitively and is subject to the subjective and self-serving interests of project developers and certifiers.
• Estimates of emission reductions for coal phaseouts via offsets are likely to be inflated because they rely on uncertain baselines of historical power generation and guesses about what power sources will replace the retired plants 10 to 15 years in the future.
• Offset-based schemes create perverse incentives that may discourage governments from implementing national coal phaseout commitments or carbon pricing, as such policies would invalidate the 'additionality' required for the offsets to be viable.
• To achieve a just transition, the document argues that the focus must shift from offsets to increasing public concessional finance for plant closures and accelerating the deployment of sustainable power alternatives.

APA

Martin, L. (2024). No traction: offsets won’t deliver the climate benefits of coal phaseouts. Reclaim Finance. https://reclaimfinance.org/site/en/2024/11/13/no-traction-offsets-wont-deliver-the-climate-benefits-of-coal-phaseouts/

Chicago

Martin, Léo. No traction: offsets won’t deliver the climate benefits of coal phaseouts. Reclaim Finance, 2024. https://reclaimfinance.org/site/en/2024/11/13/no-traction-offsets-wont-deliver-the-climate-benefits-of-coal-phaseouts/.

Wikipedia

{{cite press release |last1=Martin |first1=Léo |title=No traction: offsets won’t deliver the climate benefits of coal phaseouts |publisher=Reclaim Finance |date=13 November 2024 |url=https://reclaimfinance.org/site/en/2024/11/13/no-traction-offsets-wont-deliver-the-climate-benefits-of-coal-phaseouts/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{martin2024traction, author = {Martin, Léo}, title = {{No traction: offsets won’t deliver the climate benefits of coal phaseouts}}, publisher = {Reclaim Finance}, year = {2024}, month = nov, url = {https://reclaimfinance.org/site/en/2024/11/13/no-traction-offsets-wont-deliver-the-climate-benefits-of-coal-phaseouts/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }