CATA’s coal transition journey

CATA’s coal transition journey

Picture of Climate Smart Ventures

Climate Smart Ventures

Photo by Johannes Plenio on Unsplash

To limit global temperature rises to 1.5˚C, coal generation must be reduced by 80% of 2010 levels by 2030 and phased out by 2040[1]. This can only happen with large-scale collaboration, new tools and methodologies, recognition of the social elements of the transition, and innovative financing mechanisms.

At COP26 we announced the Coal Asset Transition Accelerator, or CATA, a philanthropically funded initiative designed to help meet these needs with a particular focus on the role of finance.

CATA’s three core partners, the Carbon Trust, Climate Smart Ventures and RMI, aim to drive collaboration and accelerate the development of Coal Transition Mechanisms (CTMs) – innovative financing and operating mechanisms that support the coal transition. CATA will support stakeholders along a “Coal Transition Journey”, which outlines the stages in a country’s transition away from coal from scoping to piloting.

CATA partners believe that a whole systems approach, which recognises the importance of technical and social considerations, is essential to unlock finance to accelerate a coal-to-clean transition and pilot CTMs. Recognising this, CATA’s Coal Transition Journey has three main stages:

  • The first is system-wide coal transition scoping. This will help stakeholders define the status of coal transition and the broader considerations to address when developing financing mechanisms. This includes assessment of the energy system, policy and social aspects of the coal transition to ensure future plant-level transactions deliver impact across all dimensions. CATA partners are currently carrying out fleet-level analysis in South Africa and Pakistan to identify opportunities to accelerate decommissioning of individual coal plants.
  • The second is the conceptualisation of asset-level transition mechanisms. This involves developing coal transition financing options that are most appropriate, considering the local energy system, social-economic and political context. RMI are primarily focused on this aspect of the journey with an initial focus in Indonesia and Vietnam.
  • The final stage is piloting transition mechanisms at the asset level. This involves supporting power asset owners with the development of portfolio and plant-level pilots of coal transition transactions. Climate Smart Ventures is primarily focussed on this aspect of the journey and have been involved in private-sector led coal transition transactions in the Philippines, Indonesia, and other countries in Asia.
 
Successful coal asset transition will require close collaboration with global and local partners. The core CATA partners are working together to bring the right expertise to tackle coal asset transition challenges around the world. Current projects are being delivered in collaboration with the University of Cape Town (UCT), Institute for Essential Services Reform (IESR), and Vietnam Initiative for Energy Transition (VIET). Working with local partners, while bringing global thinking and best practice, is central to CATA’s aim to be an independent, geographically balanced centre of expertise.

CATA has now begun its second phase of work, which runs until summer 2023. This phase will be delivered through three core elements. The first is the CATA Landscape Monitor, which will synthesise and analyse the latest coal transition data and insights to identify high impact opportunities for accelerating coal asset transition. The second is the CATA Technical Assistance (TA) Facility, which will provide technical assistance to key stakeholders to enable them to accelerate transition away from coal. Finally, to improve collaboration, members of the global coal transition community will be convened to exchange ideas, develop new tools and advance thinking through the CATA Knowledge Hub.

The global transition from coal to clean energy is gathering momentum. However, urgent action is needed to accelerate the transition and to ensure this happens in a sustainable, equitable and inclusive manner. Every country will have a different journey and success is dependent on collaboration. We invite partners, funders and recipients to get in touch with CATA to help push this agenda forward.

Notes

  • [1] Climate Analytics, 2019. Global and regional coal phase-out requirements of the Paris Agreement: Insights from the IPCC Special Report on 1.5˚C. Available at: Coal_Report_September-Formatted (climateanalytics.org).