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Statement on “No New Coal” from Michael R. Bloomberg, Mark Carney and Mary Schapiro

The authors welcome the updated UN Race to Zero commitment criteria, particularly ending all financing activities for new coal.

On June 15th, 2022, the UN Race to Zero updated its membership criteria and made explicit the requirement for alliance members to “phase down and out all unabated fossil fuels.” Included in the UN Race to Zero’s “Interpretation Guide” of its updated criteria is the statement that “Race to Zero members must restrict the development, financing, and facilitation of new fossil fuel assets in line with appropriate scenarios. Across all scenarios, this includes no new coal projects.” 1

We want to be unequivocal on this point: there is no rationale for financing new coal projects. The consensus, across all rigorous science-based pathways, is that new coal capacity (both extraction and power generation) is inconsistent with achieving net zero and limiting global warming to 1.5 degrees C.

Coal is the single largest source of global carbon emissions, and power generation from coal has rebounded to historically high levels, far off the path to net zero consistent with limiting global temperature increases to 1.5 degrees C.[2] We, therefore, reinforce those calling[3] for the phaseout of all unabated coal in advanced economies by 2030 and globally by 2040.  At COP26, 46 countries supported the Global Coal to Clean Power Transition Statement committing to “cease issuance of new permits for new unabated coal-fired power generation projects, cease new construction of unabated coal-fired power generation projects and to end new direct government support for unabated international coal-fired power generation”.[4]

The economics of energy clearly favors renewable sources.  Latest estimates[5] suggest the all-in costs of electricity generation from utility-scale solar and wind are around 40% lower than for new coal or gas-fired power and represent the cheapest source of new-build power in countries representing 90% of global electricity generation. Indeed, across countries that make up two-thirds of global electricity generation, deploying new solar and wind would be cheaper than running existing coal and gas power assets.

Energy security also favors renewable power. The folly of our lean, fossil fuel-based global energy system has been laid bare by the war in Ukraine. In contrast, once built, clean energy systems will be more efficient, resilient, and reliable—no one owns the sun and the wind; hydrogen is everywhere.

In relation to existing coal assets, we also welcome the UN Race to Zero’s requirement that members clearly state how they will accelerate the phase-down and phase-out of existing coal assets.

We also welcome the recently published GFANZ report on “The Managed Phaseout of High-emitting Assets” to promote the development of a net zero-aligned approach to the early retirement of high-emitting assets, including coal. This approach supports an orderly transition, including in those emerging market and developing economies (“EM&DEs”) that are currently heavily dependent on coal. The GFANZ Report stresses that simply divesting or withdrawing finance from high-emitting assets may not shorten their lifespans and may even lead to higher real world greenhouse gas emissions if those who buy and finance such assets are not themselves committed to align with Net Zero. The GFANZ report proposes a more effective approach that involves greater transparency on the near-term continuance of finance for existing assets in line with the net-zero objective, and consistent with the commitments regarding early retirement made by GFANZ members in the context of the UN Race to Zero and the relevant sector-specific alliance.

We support a just transition away from coal, recognizing some economies’ high dependence on these assets. To support EM&DEs that are pursuing ambitious approaches to coal and fossil fuel phaseout, we are working to ensure that Country Platforms, such as Just Energy Transition Partnerships (JETPs), are structured to crowd-in private finance as well as through on-the-ground efforts to begin to finance the necessary projects.

Action

In line with the UN Race to Zero criteria, members of the net-zero financial sector alliances must identify and end any financing and investing in support of new coal activities. Their compliance with these new criteria will be assessed by June 2023. More generally, as part of their transition planning, members must establish and apply financing policies to phase out and align carbon-intensive sectors and activities, such as thermal coal, oil and gas, and deforestation, not only through asset divestment but also through transition finance that reduces real world emissions.[6] To assist with these efforts GFANZ will continue to develop and implement a framework for the Managed Phaseout of High-emitting assets.[7]  Finally, GFANZ will continue to work with partners to support EM&DEs looking to carry out their own energy and wider net zero transitions, to ensure that the private sector plays its full part.

While ambitious actions from net zero-committed private financial institutions are essential, it is critical that governments make good on their own net-zero commitments.  In particular, they must deliver the necessary policies to perform their own energy transitions as quickly as is feasible, and in line with the science to limit warming to 1.5 degrees C. Governments must also do more to require that companies perform – and disclose – their own transitions.  In addition, efforts should support EM&DEs in their own energy transitions, including addressing shared and country-specific barriers to the crowding in of public and private finance.

While halting the financing of new coal is absolutely necessary to limit warming to 1.5 degrees C, we recognize this imperative brings significant operational and social challenges. We, alongside our teams in the GFANZ Secretariat and UN Race to Zero, stand ready to work with sector-specific alliances, individual financial institutions, and other relevant parties to overcome these challenges.

Signed,

Michael R. Bloomberg (Co-Chair of GFANZ)
Mark Carney (Co-Chair of GFANZ)
Mary Schapiro (Vice Chair of GFANZ)

These remarks reflect the personal views of the authors.



Notes to Editors

The Glasgow Financial Alliance for Net Zero (GFANZ) is a global coalition of seven sector-specific alliances organized under the umbrella of the United Nations Framework Convention on Climate Change (UNFCCC) Race to Zero campaign (“UN Race to Zero”). Each alliance sets commitment criteria for its members, anchored in the starting line criteria of the UN Race to Zero. GFANZ aims to harness the power of private finance through these alliances to accelerate the transition to a net zero economy.