You are here: Home Knowledge Base The End of the Age of “King Coal” Solutions A Four-Step Approach to Dethrone King Coal and Embrace a Renewable Future: Phase Out Fossil Fuels, Stop Funding Them, Hold the Polluters Accountable, and Scale-Up Renewable Energies!
Symposium 2015

Solution for The End of the Age of “King Coal”

The Challenge

Over 80 % of global coal reserves cannot be burned if the world is serious about limiting global warming to a maximum of 2°C above pre-industrial levels and thus prevent dangerous climate change impa ...

Over 80 % of global coal reserves cannot be burned if the world is serious about limiting global warming to a maximum of 2°C above pre-industrial levels and thus prevent dangerous climate change impacts. Coal mining is connected to serious human rights violations and environmental disasters while coal power plants are polluting air and water, causing negative health impacts and often death. Coal is the main energy resource for many countries across the world and often considered the only option for cheap energy access for the poor. Many governments are heavily subsidizing coal projects, technologies and infrastructure - often with official development assistance budgets. However, the dusk of the age of ‘King Coal’ might be nearer than we think: financial institutions, investors and shareholders alike are realizing that investing in a sunset technology of “unburnable carbon” puts them at high risk while fossil fuel companies are facing emerging litigation risks for the climate change impacts their products are causing and also for their role in actively preventing the implementation of effective climate policies.

A Four-Step Approach to Dethrone King Coal and Embrace a Renewable Future: Phase Out Fossil Fuels, Stop Funding Them, Hold the Polluters Accountable, and Scale-Up Renewable Energies!

88% of proven coal reserves (plus one third of the oil and half of the natural gas) cannot be burned if we’re serious about preventing a global climate catastrophe. But instead of implementing policies to realize that objective, our governments are not only continuing to subsidize the fossil fuel sector but are even using scarce public resources to find new reserves. The G20 governments alone are paying US$88 billion each year in exploration subsidies for new fossil fuels! The IMF calculated that post-tax subsidies for coal alone (including environmental damage) reached 3.9% of global GDP in 2015!

Between 2007 and 2014 more than US$73 billion (or US$9 billion a year) were approved in public finance for coal with Japan (US$20 billion), China (almost US$15 billion), Korea (US$7 billion) and Germany (US$6,8 billion) leading. But commercial funding for the coal sector is also substantial: Ninety-two leading banks provided at least €66 billion in 2013—a more than fourfold rise in climate-busting coal financing when compared to 2005.

A ground-breaking report by Richard Heede released in 2013 revealed that two-thirds of global carbon emissions can be traced back to 90 Big Oil, Coal and Gas Producers (the Carbon Majors report). The 35 coal producers of the Carbon Majors alone account for one third of global emissions since 1988—when the IPCC was founded and companies could no longer deny knowledge of the harm their product was causing. But instead of acting upon that knowledge by changing their business model, the coal industry (along with Big Oil) has actively worked towards preventing effective climate policies both at the national and international level by funding climate skeptics, sawing doubt about climate science and by lobbying against renewable energy targets and successful instruments like the feed-in tariff.

1.2 billion people worldwide have no access to electricity. More than 300 million Indians in over 80 million households are affected, two thirds of them in villages which are connected to the grid. “Energy poverty”—i.e., the lack of access to modern, non-polluting forms of power, i.e., primarily electricity—harms lives in numerous ways: long and daily shutdowns of power (“load shedding”) increase the work load and reduce efficiency in businesses and farms that depend on irrigation by pumped water; indoor pollution from cooking with firewood, cow dung and kerosene make women suffer from respiratory diseases; schoolchildren lose learning opportunities due to poor lighting in the night.

Even if strong mitigation and adaptation actions were taken, the residual cost of climate change may be in the order of US$275 trillion between 2000 and 2200 for all countries. For Africa alone loss and damage is estimated at ~US$100 billion per year by 2050 for below 2oC and ~US$200 billion per year by 2040 for above 4oC. In 2013, Typhoon Yolanda (Haiyan) displaced 4 million people, destroyed or damaged 1 million houses, killed at least 6,300 people, and caused approximately US$2 billion in damage in the Philippines. It is time to hold the polluters accountable!

Leaving “coal in the hole, oil in the soil and gas in the grass” is not only the most efficient and effective way to tackle the climate crisis but the one facing the strongest opposition since those controlling our energy system today (the big coal, oil and gas companies) have a lot to lose. A solution requires at least a four step approach:

  1. Globally agree on a goal and pathway for a phase out of fossil fuels that leaves 90% of proven coal reserves, one third of oil and half of global gas reserves in the ground, thus leaving a realistic chance of limiting global warming to below 2°C above pre-industrial levels without the need to employ dangerous and risky technologies such as Carbon Dioxide Capture and Storage (CCS) or geo-engineering.
  2. End public finance for coal now or within the next few years. This includes a phase out of fossil fuel/ coal subsidies organized in a way that ensures poor people and vulnerable communities not to suffer from an increase in energy prices. It also includes an immediate stop of funding for new coal projects, an exclusion from coal (and other fossil fuels) for any Official Development Assistance (ODA) or climate finance projects, and engagement with private and institutional investors in coal projects to get them to divest.
  3. Hold coal and other fossil fuel producers accountable for the damage their products have caused and are continuing to cause, including through a levy on fossil fuel extraction to fund the Warsaw Mechanism on Loss and Damage under the UNFCCC. Existing international law, in particular the polluter pays principle, the no harm rule, and the right to compensation supports such a system.
  4. Massively scale-up funding for decentralized renewable energy projects, including through a globally funded feed-in tariff for renewable energy mini-grids in developing countries, to address the urgent problem of energy poverty, especially in the rural areas.

 

This proposal draws from precedents such as the IOPC, the oil spill compensation regime which collects levies from companies that ship oil internationally which are used as compensation in the incidence of oil spills.