Unlocking Coal Contracts

The report identifies that over 93 percent of coal power is shielded from competition via power purchase agreements (PPAs). Using a representative Indonesian PPA as a model, RMI proposes three pathways for decarbonization: early termination, replacement with clean energy PPAs, and restructuring for emission reductions. The analysis suggests that coal transition mechanisms (CTMs), such as blended finance loans and managed transition vehicles (MTVs), can maintain costs for taxpayers and earnings for investors while significantly reducing emissions. Specifically, an MTV could drive an 80 percent emissions reduction between 2025 and 2035, and combining CTMs with policy shifts could increase owner earnings by up to 30 percent and cut emissions by up to 90 percent.

• A vast majority of global coal power is protected from market competition, primarily through the use of coal power purchase agreements (PPAs).
• RMI identifies three primary strategies for decarbonizing coal PPAs based on grid requirements: early termination of the contract, replacing the coal PPA with a clean energy PPA, or restructuring the existing PPA to reduce emissions prior to closure.
• The use of coal transition mechanisms (CTMs) can enable decarbonization without increasing costs for taxpayers and customers or reducing investor earnings. For instance, a managed transition vehicle (MTV) could achieve an 80 percent emissions reduction between 2025 and 2035, while combining CTMs with policy shifts could increase plant owner earnings by up to 30 percent and reduce emissions by up to 90 percent.

APA

RMI (2023). Unlocking Coal Contracts. https://rmi.org/resources/unlocking-coal-contracts/

Chicago

RMI. Unlocking Coal Contracts. 2023. https://rmi.org/resources/unlocking-coal-contracts/.

Wikipedia

{{cite report |author=RMI |title=Unlocking Coal Contracts |date=31 July 2023 |url=https://rmi.org/resources/unlocking-coal-contracts/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2023unlocking, author = {{RMI}}, title = {{Unlocking Coal Contracts}}, institution = {RMI}, year = {2023}, month = jul, url = {https://rmi.org/resources/unlocking-coal-contracts/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }