TEN GUIDING PRINCIPLES FOR FINANCING COAL RETIREMENT MECHANISMS

The policy brief argues that existing coal retirement mechanisms (CRMs) in Asia and Africa, such as Just Energy Transition Partnerships (JETPs), are failing due to insufficient funding, reliance on non-concessional loans, and lack of transparency. To address these failures, the authors propose ten principles. These include aligning phaseouts with 1.5°C pathways, immediately stopping all coal expansion finance, replacing coal only with sustainable renewables, and prohibiting the use of tradeable carbon offsets. The brief emphasizes that financing must be concessional to avoid increasing national debt and that the process must include social and environmental remediation for affected communities and workers.

• Current coal retirement mechanisms (CRMs) in Asia and Africa have struggled to convert pledges into actual funding and lack agreement on spending priorities.
• Specific failures of CRMs are noted in several countries: South Africa's JETP is hindered by power sector crises and utility debt; Indonesia's JETP is criticized for only proposing the retirement of two plants (1.7 GW) while continuing to plan 14.4 GW of 'captive' coal power; Vietnam has not identified plants for closure; and in the Philippines, a major coal developer increased its shareholding in a CIF-ACT project while continuing to build new plants.
• A primary barrier to CRM progress is that most pledged funds are intended as non-concessional loans, which risks increasing the national debt of participating countries.
• The authors argue that tradeable carbon offsets should not be used to fund CRMs because they may negate climate benefits by allowing buyers to avoid reducing their own emissions and are prone to 'gaming' through subjective counterfactual calculations.
• To prevent 'moral hazard,' the brief asserts that any entity actively planning or building new coal projects should be ineligible for CRM finance.
• The proposed principles mandate that coal power be replaced specifically by sustainable renewables like solar and wind, rather than high-carbon alternatives such as methane gas or blue hydrogen.
• CRMs must include mechanisms for social and environmental remediation, including retraining for displaced workers and the establishment of grievance and accountability mechanisms.

APA

Trend Asia (2023). TEN GUIDING PRINCIPLES FOR FINANCING COAL RETIREMENT MECHANISMS. https://trendasia.org/wp-content/uploads/2024/01/PDF-for-publication-Coal-phaseout-principles-formatted.pdf

Chicago

Trend Asia. TEN GUIDING PRINCIPLES FOR FINANCING COAL RETIREMENT MECHANISMS. 2023. https://trendasia.org/wp-content/uploads/2024/01/PDF-for-publication-Coal-phaseout-principles-formatted.pdf.

Wikipedia

{{cite report |author=Trend Asia |title=TEN GUIDING PRINCIPLES FOR FINANCING COAL RETIREMENT MECHANISMS |date=1 December 2023 |url=https://trendasia.org/wp-content/uploads/2024/01/PDF-for-publication-Coal-phaseout-principles-formatted.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{trendasia2023ten, author = {{Trend Asia}}, title = {{TEN GUIDING PRINCIPLES FOR FINANCING COAL RETIREMENT MECHANISMS}}, institution = {Trend Asia}, year = {2023}, month = dec, url = {https://trendasia.org/wp-content/uploads/2024/01/PDF-for-publication-Coal-phaseout-principles-formatted.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }