Members of the 30-strong UN-convened Net-Zero Asset Owner Alliance have published their position on thermal coal, calling for the cancellation of all new thermal coal projects, a phase-out of all unabated existing coal-fired electricity generation and a cessation of the financing, development and planning of further thermal coal power plants.
In its Thermal Coal Position, the Alliance says all companies in their portfolios should have a firm understanding of the wider implications for the activities, operations and projects that they are engaged in. Companies should develop their individual transition pathways towards decarbonization, guided by the following principles:
- Other than coal plants currently under active construction, no further thermal coal power plants should be financed, insured, built, developed or planned;
- There should be an immediate cancellation of all new thermal coal projects, including thermal coal plant, coal mines and related infrastructure (i.e. supplying products or services to thermal coal-based projects or business models) that are in pre-construction phase;
- There should be a phase-out of all unabated existing coal-fired electricity generation in accordance with 1.5°C pathways, as provided by the IPCC and referenced by the International Energy Agency (IEA) and Powering Past Coal Alliance (PPCA).
“Participation in activities and projects that are not aligned with these principles is incongruent with our net-zero goals and the aspirations we have in respect to the different decarbonization strategies of the companies we invest in,” the Alliance says in the Thermal Coal Position.
Alliance members will primarily aim to support companies adopt transition plans in line with members’ position through engagement. Members are able to employ an escalation strategy that may over time result in divestment if the company remains irresponsive to its demands.
Governments must focus on incentivizing clean energy technologies and meeting energy needs in both developed and emerging economies with low-carbon options while supporting workers and communities impacted by the low-carbon energy transition.
“Together, investors, governments and companies all have a responsibility to act on global emissions reduction. Additional thermal coal developments for energy generation are ultimately irreconcilable with the exercise of this responsibility,” the Alliance says.
The Thermal Coal Position will be presented at the first day of the Green Horizon Summit at 13.20 GMT on Monday 9th November 2020. Further details
Media Contact: Oliver Wagg; Oliver.wagg@un.org; +44 7885 377 264
Notes
In the lead up to the convening of his Climate Action Summit in New York in September 2019, where the Alliance was launched, the UN Secretary-General made clear that as part of the global effort to avert the climate crisis, there should be “no new coal” from 2020 onwards.
Since thermal coal-generated power is responsible for two-thirds of the emissions that come from the energy sector globally investors cannot decarbonize several other sectors, including transport, if they do not decarbonize power generation and supply first.
The burning of thermal coal for energy is the single largest contributor to man-made global temperature increase, accounting for about one third of the 1°C temperature rise above pre-industrial levels already observed. The total remaining carbon budget consistent with limiting global warming to 1.5°C is less than 420 Gt CO2, with annual depletion of the budget by about 42 Gt CO2. However, CO2 emissions already committed from existing coal fired power plants (~200Gt) and plants that are planned or under construction (~150 Gt) would themselves nearly exhaust this budget.
About the Net-Zero Asset Owner Alliance
Convened by United Nations Environment Programme Finance Initiative (UNEP FI) and the Principles for Responsible Investment (PRI), the UN-convened Net-Zero Asset Owner Alliances is an international group of 30 institutional investors (as of 5th November 2020) delivering on a bold commitment to transition our investment portfolios to net-zero GHG emissions by 2050.
Representing $5.0 trillion assets under management, the Alliance shows united investor action to align portfolios with a 1.5°C scenario, addressing Article 2.1c of the Paris Agreement. The Alliance is part of the UNFCCC Race to Zero campaign (https://unfccc.int/climate-action/race-to-zero-campaign) and supported by WWF and Mission