How to Finance a Credible Coal Transition

The document addresses the need for credible financing to accelerate the global transition from coal to clean energy, specifically focusing on coal transition mechanisms (CTMs). It highlights that while CTMs are essential because 93 percent of coal capacity is shielded from market pressures by regulation or contracts, they face significant reputational risks and constraints from private financial institution policies. To address this, the Climate Bonds Initiative (CBI), Climate Policy Initiative (CPI), and RMI have developed guidelines to ensure CTMs deliver positive climate and social outcomes, avoid moral hazard, and support a just transition for workers and communities.

• A vast majority of global coal capacity is protected from market-driven phase-outs by long-term contracts or electricity regulations, making financial tools necessary to accelerate closures.
• Coal transition mechanisms (CTMs) face significant reputational risks because they can appear to provide financing to coal plant owners, which may conflict with the policies of private financial institutions that limit new coal investments.
• To ensure CTM credibility and alignment with 1.5°C goals, the proposed guidelines recommend assessing plants for moral hazard and non-additionality, demonstrating long-term emissions savings, protecting workers and communities, and maintaining public transparency.

APA

RMI (2022). How to Finance a Credible Coal Transition. https://rmi.org/resources/how-to-finance-a-credible-coal-transition/

Chicago

RMI. How to Finance a Credible Coal Transition. 2022. https://rmi.org/resources/how-to-finance-a-credible-coal-transition/.

Wikipedia

{{cite report |author=RMI |title=How to Finance a Credible Coal Transition |date=21 November 2022 |url=https://rmi.org/resources/how-to-finance-a-credible-coal-transition/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2022how, author = {{RMI}}, title = {{How to Finance a Credible Coal Transition}}, institution = {RMI}, year = {2022}, month = nov, url = {https://rmi.org/resources/how-to-finance-a-credible-coal-transition/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }