By Beate Sonerud, Climate Bonds Initiative policy analyst.
According to a released agenda, the Coaltrans world coal conference in October is planning to discuss: “Green bonds and the coal industry – A new frontier?". We could free up some time on their agenda right now by providing a simple answer: No, it is not.
This is not our opinion here. In conjunction with the UN COP (Climate Conference) in Warsaw last year, 27 leading scientists from the US, Germany, Japan, China, India, Brazil and South Africa released a joint statement saying that new coal without CCS (carbon capture and sequestration) is incompatible with keeping global warming under 2 degrees. An excerpt from the statement illustrates the magnitude of difference between so-called “clean” coal and other sources of energy:
“Even the most efficient coal-fired power plants emit more than 15 times the amount of CO2 per unit of electricity compared to renewable energy systems, and more than twice the amount of efficient gas fired plants. It is misleading to speak about “high-efficient low-emissions coal combustion technologies” unless equipped with CO2 capture and storage.”
In addition to the support of these scientists, the World Bank, one of the pioneers of the green bond market, supports excluding efficient coal from green bond issuance. The bank specifically excludes coal-fired power plant retrofits from its green bond pool because CICERO, a research centre and reviewer of green credentials for many green bond issuances, stated that, in most countries, extending the life of coal-fired power plants is not aligned with the trajectory of emission reductions required. We whole-heartedly agree.
Another point we think is important to hammer home in the discussion of coal retrofits and green bonds, is around the argument that "well, anything is always better than nothing".
Actually, this is not true, because when it comes to climate change, the timing matters. Investing in “clean coal” now means coal use will be locked in for many years into the future. If no retrofits of coal plants are made, they will shut down sooner, which is what we need to see. Effectively, retrofitting coal plants legitimizes their continued use, and can therefore be detrimental in addressing climate change.
This is the same argument that we have previously highlighted in relation to shallow energy efficiency retrofits. For us, deep retrofits are required to qualify as green investments, as making building marginally more efficient can be detrimental to getting where we need to get to due to the lock-in effects, as buildings may only be retrofitted every 20-30 years.
To get of what the International Energy Agency says is our current path of "catastrophic" 6-7 degree climate change, we need to be ambitious, and not accept anything that is "marginally less bad" as green.
