Five Ways to Finance Early Coal Phaseout

The briefing outlines the necessity of a "managed phaseout" for coal plants, where stakeholders coordinate to retire plants early and replace them with clean energy. It identifies five specific financing mechanisms—managed transition vehicles, coal retirement credits, ratepayer-backed securitizations, power hedges, and concessional financing—that can provide the necessary capital to compensate workers and communities while funding renewable energy projects.

• A "managed phaseout" requires a coordinated agreement between plant owners, financiers, electricity buyers, coal sellers, grid operators, local governments, regulators, workers, and impacted communities to shut down plants earlier than planned and replace them with clean energy.
• The document identifies five financing mechanisms to accelerate coal retirement: managed transition vehicles (selling the plant to a buyer who agrees to early closure), coal retirement credits (payments for avoided emissions), ratepayer-backed securitizations (using lower interest rate loans to fund phaseouts), power hedges (guaranteed payments for renewable generation to secure cheap loans), and concessional financing (grants or low-interest loans from development banks or philanthropic foundations).
• Specific examples of these mechanisms include the Philippines implementing the first managed transition vehicle and Chile using a loan for a wind farm to pay coal plant owners for emissions savings.

APA

RMI (2023). Five Ways to Finance Early Coal Phaseout. https://rmi.org/resources/five-ways-to-finance-early-coal-phaseout/

Chicago

RMI. Five Ways to Finance Early Coal Phaseout. 2023. https://rmi.org/resources/five-ways-to-finance-early-coal-phaseout/.

Wikipedia

{{cite report |author=RMI |title=Five Ways to Finance Early Coal Phaseout |date=8 February 2023 |url=https://rmi.org/resources/five-ways-to-finance-early-coal-phaseout/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2023five, author = {{RMI}}, title = {{Five Ways to Finance Early Coal Phaseout}}, institution = {RMI}, year = {2023}, month = feb, url = {https://rmi.org/resources/five-ways-to-finance-early-coal-phaseout/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }