Accelerating Coal Transition Investment Program

WHAT IT AIMS TO ACHIEVE

The Accelerating Coal Transition (ACT) investment program is a one-of-a-kind mechanism that presents a unique opportunity for a large-scale solution to the generational crisis of climate change. It raises the global ambition for action; while developed countries have identified transitioning out of coal as a priority in dedicating large-scale resources to the process, there is currently no such initiative underway in the developing world. ACT provides a dedicated platform that offers resources at scale at a time when these countries are facing competing pressures on their public finances. It will have a powerful demonstration effect by testing different models and approaches that can be applied more widely, thereby further accelerating the rate and scale of energy transition.

Why it’s needed

Reducing dependence on coal-fired power generation is essential to limiting the global temperature increase to 1.5°C by 2030. While a reduction of 80 percent in coal energy is needed to meet this goal, global energy-related CO₂emissions have continued to rise, reaching record levels in 2018. Globally, there are still more than 15,000 active coal mines.

The transition to clean energy represents an enormous economic opportunity for developing countries. The advent of low-cost solar and wind generation, along with the development of battery and other energy storage technologies, give countries an opportunity to reevaluate the construction of new coal assets, as well as retire and repurpose existing assets. This will not only save money, but also create jobs, and provide critical climate, public health, and environmental benefits.

HOW IT WORKS

The ACT investment program offers a holistic toolkit to support countries transitioning away from coal, tackling challenges linked to national strategies, people, and communities, as well as land and infrastructure. It builds support at the local level to reconsider the development of new coal plants and accelerate the retirement of existing coal assets. Finally, it fosters new economic activities fueled by new sources of energy by working with public sector utilities and private sector operators to define paths to advance clean energy transitions.

ACT works across three pillars to support the transition away from coal.

Governance: To achieve support and commitment at the country level for transitioning out of coal assets, the ACT program will consult with key stakeholders, build technical and institutional capacities, as well as help governments develop transformation strategies and economic and social development plans, among other activities.
People and Communities: In line with the premise of ensuring that the approach to addressing coal transition challenges is holistic, the program will support socioeconomic measures to minimize the impacts of the transition on people and communities. Measures include a focus on upskilling and reskilling to help people not only retain jobs where feasible, but also prepare for new jobs as available.
Infrastructure: Reclaiming and repurposing the existing infrastructure, including land and power plants, will be a core area of support.

Delivery Challenges

While the phaseout of coal has been underway, the process has been slow due to a number of social, economic, and political challenges that have continued to hinder progress. A large existing stock of coal plants and associated mines continue to act as primary sources of energy, jobs, and other economic activities in developing countries. Emissions from existing plants still prevent countries from achieving their climate-related targets.

Time is of the essence in speeding up the coal-to-clean transition and strengthening the market for cleaner sources of energy. Identifying this as one of its most urgent priorities, the Climate Investment Funds (CIF) announced the establishment of the ACT investment program in early 2021. In June, the G7 announced up to $2 billion in support for ACT and other complementary CIF programs aimed at increasing the penetration of renewables.