The rate of significant banks, insurers and asset managers/owners announcing coal restrictions has seen a step rise to reach 127 institutions. Citi, for example, will no longer provide project-related financing for new thermal coal mines and has pledged to halve its coal credit exposure from a 2020 baseline by 2025, and cut it to zero by 2030.
BlackRock, the world’s largest asset manager, made a landmark announcement in January 2020 to divest thermal coal mining exposures from its $1.8 trillion of actively managed funds. Since then, a further 20 players followed suit and pledged to gradually exit coal financing.
China – lender of last resort for coal plant
The global renewable energy champion China is simultaneously funding over one-quarter of coal plants currently under development outside the country. China has committed or proposed about $36 billion in financing for coal-based projects in 23 countries. Most ventures are based in Bangladesh, Pakistan, Vietnam, Indonesia and South Africa.
State-controlled Chinese banks have offered funding for over one quarter, or 102 GW of the 399 GW of coal-fired power generation capacity hat is currently under development outside China. Projects include investment in export coal mines, coal-fired power plants, and the associated rail and port infrastructure.
Tide turns to renewables elsewhere
Renewables are now the low cost source of energy, and they have near zero carbon impact on our warming planet. IEEFA expects the deflation of renewable energy costs to continue for the coming decade, accelerating the realisation of stranded asset losses for aging and obsolete coal-fired power plants, and other fossil fuel technologies.
Governments and corporate leaders are also moving away from coal. President Moon Jae-in of South Korea has reiterated his Green New Deal to cease coal financing globally, while Shell, Total and BP pledged to move into zero emissions electricity generation.
It appears that coal power generation actually peaked in 2018, analysts noted. There was an unprecedented and unexpected 3% decline in coal-fired power generation globally in 2019, they said, suggesting it is now set for a second consecutive decline in 2020.
India tenders for solar PV
In India, the third largest economy in Asia-Pacific, the cost of renewable energy is now 20-30% lower than the cost of a new domestic coal-fired power plant, and 50% below that of a new import-reliant coal power plant. Even as electricity demand has collapsed 27% this month to-date, the Indian government announced the awarding of a $2 billion, 2 Gigawatt (GW) solar tender at a near record low price of Rs2.55/kWh or $33/MWh.
“Renewables are clearly the low cost, zero inflation, zero emissions source of new domestic electricity supply for India,” IEEA analysts noted.
