Workshop on the Potential of Early Coal Retirement

Hina Aslam (SDPI Pakistan), Melissa Brown (Daobridge Capital), Alex Clark (University of Oxford & Boston University), Camilla Fenning (E3G) Rhys Gordon-Jones (Embassy of the United Kingdom in Beijing), Cecilia Han Springer (Boston University) Haneea Issad

On March 25, 2022, the Green Finance & Development Center at FISF Fudan University, together with the Centre for Sustainable Finance at SOAS University of London and Boston University’s Global Development Policy (GDP) Center organised a closed-door workshop on discussing potentials and strategies for accelerating the retirement of global coal-fired power plants. During the workshop, participants from over 15 countries shared current efforts, strategies and regulatory, social and financial challenges on this topic. The workshop was supported by the UK Pact Programme.

A question of retiring 2,000 GW of coal-fired power plants
Globally, there are more than 2,000 GW of coal power in operation, accounting for about 30% of global CO2 emissions. To meet the Paris Agreement and avoid catastrophic climate change, all coal capacity should be phased out by 2040.

Yet, a fundamental dilemma of the 21st century is reconciling the need to de-carbonize with the rising demand for energy in rapidly industrialising countries, notably in South Asia: in many South-East Asian countries, coal fired power plants tend to be younger with a long lifetime ahead, while energy needs are still rapidly rising.

A particular focus of the workshop was the role of China in supporting the green transition and evaluating potentials for early coal retirement in its overseas investments. China was one of the largest sponsors of overseas coal, particularly through its Belt and Road Initiative (BRI). Yet, China is gradually shifting its overseas energy investment strategies to favour more renewables and can position itself as a provider of sustainable development finance. Xi Jinping's announcement to stop coal overseas investments raised the potential question of how to accelerate the phase-out of existing coal-fired power-plants fleet to meet emission targets.

Yet, coal retirement is highly complex. Clearly, various countries have committed to ambitious carbon neutrality targets, putting coal-assets at risk of becoming stranded in the future. Should countries really move ahead with their climate ambitions, China’s financial institutions could be risk of holding underutilized assets with relevant default risks. Alternatively, China could evaluate how to support investments toward accelerating the coal phase-out.

During this closed-door workshop, experts from financial sector, development finance institutions, academia and think tanks shared current practices, strategies and challenges to foster discussion among participants for early coal retirement under Chatham House rules.

Full agenda and summary: Workshop on the Potential for Early Coal Plant Retirement