Finance Taskforce

Through the PPCA Finance Taskforce launched in June 2020, underpinned by the PPCA Finance Principles, finance and government members and partners of the PPCA are working together to cease new investments in coal-fired power, phase out existing coal capacity and boost investments in clean energy.

More and more financial institutions recognise the business case for moving away from coal. With renewable energy increasingly more economical than coal, continued investments in coal power pose the risk to investors of being left with cumbersome, costly and polluting assets on the books. Despite this positive trend a significant amount of investment, from private and public sources, is still being made in unabated coal power around the world.

PPCA Finance Taskforce members engage in joint advocacy among policy makers and businesses, promote the shift of finance from coal to clean energy in the public debate, and ensure financial markets and policy makers are informed about phase-out plans and coal financing flows. They work in close cooperation with existing initiatives such as Climate Action 100+ and with PPCA partners.

The PPCA Finance Principles, to which financial institutions commit when joining the Alliance, guide the work of the Finance Taskforce. Launched in 2019, they represent a clear and comprehensive statement of how to fully align coal power-related financial services and investments with the goals of the Paris Agreement, complementing the work of Climate Action 100+ and The Investor Agenda.

The principles cover the full breadth of financing options for coal – including project and corporate level financial services, and all investments. They also emphasise the importance of advocacy by members for credible action by the finance and utilities sectors on coal phase-out. Taken together this represents signatories playing – both individually and collectively – a powerful role in the global energy transition.

PPCA Finance Principles

To meet the Paris Agreement  commitment to keep the global temperature increase well below 2°C and pursue efforts to limit it to 1.5°C, analysis shows that coal power phase-out is needed by no later than 2030 in the OECD and EU28, and no later than 2050 in the rest of the world (‘PPCA Timeframes’).

The Powering Past Coal Alliance (PPCA) is working to advance the just transition away from unabated [1] coal power generation.

Phasing out financial services and investments [2] in unabated coal-fired power and investing in clean forms of energy are important steps that financial institutions [3] can take to tackle climate change.

The PPCA Finance Principles give greater clarity to the role of financial institutions in advancing the objectives of the PPCA; help align financial services and investments with the Paris Agreement; build upon and complement the accounting and transparent reporting of climate risks by member organisations; and complement responses to the guidelines proposed by the Taskforce for Climate-Related Financial Disclosure (TCFD).

In addition to supporting the PPCA Declaration, financial institutions (as applicable [4]) as members of the PPCA commit to:

Financial Services

  • No project specific financing or wider financial services for new unabated coal-fired power plants, and no project specific refinancing or wider financial services for existing unabated coal-fired power plants that would result in their operation beyond PPCA Timeframes.
  • No new provision of financial services to companies that would result in the building of new unabated coal-fired power plants or that would be used specifically towards the generation of electricity from unabated coal beyond PPCA Timeframes.
  • Advocate for a credible public commitment to the phase-out of unabated coal power within PPCA Timeframes, by companies to which existing financial services are being provided.

Investments

  • Offer or select new products (or bespoke mandates), or make new direct investments, that avoid exposure to equity and debt instruments of companies that plan to generate electricity from unabated coal beyond PPCA Timeframes.
  • Advocate for relevant companies to seek alternatives to new unabated coal-fired power plants and advance a credible public commitment to the phase-out of unabated coal power within PPCA Timeframes, including via global initiatives like Climate Action 100+.
  • Encourage recognised investment information providers to track which companies own unabated coal-fired power plants, with an initial focus on tracking plans to build new unabated plants globally and phase-out dates for unabated plants located in the OECD.

Reporting

  • Report policies and progress on a ‘comply or explain’ basis when responding to TCFD or similar annual reporting frameworks.

Promoting the PPCA

  • Encourage others to take action on coal power phase-out and promote the PPCA, including when providing advisory services or technical assistance to relevant clients.
  • Share expertise with those financial institutions still engaged in coal power financing activities.

[1] Unabated’ refers to coal power generation without any technologies to substantially reduce CO2 emissions, e.g. operational carbon capture and storage.

[2] Financial services include lending, underwriting, advisory and insurance services. Investments include direct investments and investments through third parties.

[3] Financial institutions include banks, insurers and investors.

[4] Commitments will depend on business model. For example, in the case of development finance institutions, an exception may be made only where the country has the very lowest of IDA income levels, there is a compelling poverty reduction case, best available technology is used and full consideration has been given to the economic feasibility of low carbon alternatives. Please visit the UK Government's article UK position on public financing of coal plants overseas for an example of such criteria.