Early Retirement
According to IEA modelling, early retirement will be the primary policy lever for reducing coal power emissions on pathways consistent with the Paris Agreement temperature goal. Importantly, the IEA states that early retirement accounts for two-thirds of the necessary emissions reductions from coal power plants. There can be a secondary role for repurposing coal plants to operate more flexibly, especially in contexts where there are energy security challenges, access concerns, and a young coal fleet.
The challenges
How to overcome the complex challenges of retiring coal power plants earlier than the end of their economic life, while maintaining security and affordability of energy supply, supporting affected workers and communities?
The solutions
- Commitments, planning, regulation and market rules that provide certainty for utilities, communities and potential investors
- Policies and investments that support the effective integration of clean energy sources.
- Early and consultative planning for measures to support workers and communities.
- Public, blended or private financial mechanisms
SLTEC Plant (ACEN)
Utility, Asia
Thanks to innovative financing, utility ACEN in the Philippines closes its coal plant 25 years early, providing a model for mobilizing support and unlocking similar projects across emerging markets.
By reducing the coal plant operating life by 25 years to 2040, 50 million tons of carbon emissions have been avoided. The company is now exploring whether it can close the plant in 2030, with the help of transition credits, and replace it with renewables while ensuring a just transition. This could help avoid further 19 million tons of emissions.
Tocopilla Plant (Engie)
Utility, Latin America
Utility Engie retires its Tocopilla coal plant in Chile early and replaces it by a new wind farm thanks to a blended finance mechanism.
Retiring the coal plant 20 months early led to 500 – 700 tons of avoided CO2 emissions. Engie also managed the transition of its employees through a just transition plan.
CIF ACT Programme
Financial Institution, Global
The $1.6 billion CIF’s Accelerating Coal Transition (ACT) investment programme is the first dedicated finance facility in the world specifically designed to reduce emissions from coal-fired power plants.
Launched at COP26, the initiative has currently programmed $1.6 billion of concessional capital to facilitate the coal-to-clean transition in EMDEs. ACT Investment Plans are being developed and executed by Indonesia, South Africa, North Macedonia, the Philippines and the Dominican Republic.
ADB Energy Transition Mechanism
Financial Institution, Asia
The Asian Development Bank’s (ADB) Energy Transition Mechanism (ETM) is a ground-breaking initiative designed to accelerate the transition to clean energy.
The programme accelerates the retirement or repurposing of coal-fired power plants using blended finance from public and private sources through refinancing, acquisition, or sustainability-linked corporate loans while scaling up investment in clean energy and energy storage. The pilot transactions within the programme offer significant learnings, including on the need to manage the implications on grids, public budgets and livelihoods of the affected workers, businesses and communities.
North Macedonia
National Government, Europe
Thanks to a clear, sustained political commitment to coal phase-out and renewable energy made by the government, coupled with a comprehensive and inclusive just transition process, North Macedonia was able to secure significant support for its coal transition and make quick progress in distributing the funds.
$85 million from CIF ACT program for accelerated coal phase-out in North Macedonia is expected to mobilise a total of €3 billion into the country’s wider Just Energy Transition Investment Platform (JETIP) by 2030, aimed to deliver on the country’s commitment to phase out coal by 2030 and accelerate the retirement of 824 MW of existing coal power generation.
The CIF funding will be invested in renewable energy and energy storage as well as in human capital, promoting skills development and access to alternative livelihoods to support a just transition with an estimated 3,000 direct
The Dominican Republic
National Government, Latin America
Through continued political engagement, the Dominican Republic has underscored that, even in emerging economies with growing electricity demand, gradual diversification of the energy mix can strengthen energy security and foster inclusive development.
Within this framework, the CIF ACT program has committed USD 85 million to support technological transition initiatives in the power sector, totaling more than 310 MW of capacity. These resources are expected to mobilize approximately USD 1.2 billion in co-financing and to facilitate the issuance of high-quality transition credits, contributing to a more resilient and sustainable energy system.
The program is designed to enhance energy security by encouraging the progressive integration of renewable energy and storage solutions, together with the modernization of transmission infrastructure. It also emphasizes measures to accompany workers and local communities, ensuring that social and economic dimensions are addressed throughout the process.