Guidelines for Financing a Credible Coal Transition

This working paper by Climate Bonds Initiative, Climate Policy Initiative, and RMI introduces a four-stage gate framework to assess the credibility of coal transition mechanisms (CTMs). The framework aims to mitigate risks related to climate outcomes, social impacts on workers and communities, and reputational risks for funders, ensuring that the transition from coal to clean energy is managed and effective.

• Coal emissions have plateaued at a high level, and existing coal plants are projected to consume two-thirds of the remaining 1.5°C carbon budget if the current fleet is not transitioned. Many of these plants remain profitable because regulation or contractual structures protect them from competition, even as renewable energy costs decline.
• Coal transition mechanisms (CTMs) are financial tools designed to accelerate the managed shift from coal to clean energy. Examples include ratepayer-backed bond securitization in the United States, the Asian Development Bank’s Energy Transition Mechanism (ETM), and the Climate Investment Fund’s Accelerating Coal Transition (ACT) Investment Program.
• Climate Bonds Initiative, Climate Policy Initiative, and RMI have developed a framework to mitigate risks associated with CTMs, specifically risks regarding climate outcomes, social/environmental/economic impacts on workers and communities, and reputational risks for financiers. The framework consists of four stage gates: coal plant eligibility, coal transition pathways, social protection, and accountability.

APA

RMI (2022). Guidelines for Financing a Credible Coal Transition. https://rmi.org/resources/guidelines-for-financing-credible-coal-transition/

Chicago

RMI. Guidelines for Financing a Credible Coal Transition. 2022. https://rmi.org/resources/guidelines-for-financing-credible-coal-transition/.

Wikipedia

{{cite report |author=RMI |title=Guidelines for Financing a Credible Coal Transition |date=21 November 2022 |url=https://rmi.org/resources/guidelines-for-financing-credible-coal-transition/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2022guidelines, author = {{RMI}}, title = {{Guidelines for Financing a Credible Coal Transition}}, institution = {RMI}, year = {2022}, month = nov, url = {https://rmi.org/resources/guidelines-for-financing-credible-coal-transition/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }