As political debates about the future of coal reach fever pitch, Rocky Mountain Institute (RMI) has launched a first-of-its-kind survey demonstrating how collaboration among coal asset owners, policymakers, and environmental advocates can manage this transition quickly while minimising financial losses.
Coal-fired power generation is in structural decline. More than half of European coal plants are cashflow-negative and in India, two-thirds of coal plants are more expensive than new renewables. However, significant additional retirement of existing coal capacity is still necessary to meet the Paris Agreement. The early retirement of hundreds of billions of dollars of capital stock, locked up in uneconomic coal plants, is a structural shift with enormous implications for stakeholders.
The Coal Capital Transition Initiative at Rocky Mountain Institute is charting a new approach, based on the premise that while faster retirement of coal is both desirable and to some extent inevitable, the loss of financial value associated with stranded assets should be mitigated to ensure that all stakeholders are on board with the direction of the energy transition.
RMI’s new report, Managing the Coal Capital Transition, is based on interviews with nearly 50 stakeholders representing utilities, non-governmental organisations, and policymakers around the world seeking to identify strategies for managing this challenge.
“This is the first global survey of approaches that can help ease capital destruction for asset owners and their shareholders while offering policymakers a clearer path towards accelerating the energy transition,” said Paul Bodnar, Managing Director at Rocky Mountain Institute.
Managing the Coal Capital Transition uncovers ten different approaches used worldwide by asset owners and regulators to achieve early retirement of coal while minimising capital destruction. With a comprehensive menu of policy options and illustrative case studies detailed in the report, policymakers facing the challenges of phasing out coal-fired power generation now have a resource that allows them to craft thoughtful policy best suited to their constituents, market reality, and unique needs.
Rocky Mountain Institute (RMI) transforms global energy use to create a clean, prosperous, and secure low-carbon future. Learn more about their work and their team here.