Scaling Financing for Coal Phase out in Emerging Economies 2025

Findings 2.2 Maximum possible re-gearing + maximum concessional financing used in analysis (31% in capital stack) Unsurprisingly, combining all three financing levers – including concessional debt at maximum deployment allowed in the model – delivers the highest level of abatement for each asset in the analysis. This leads to an average of almost 10 years’ abatement, and a total of 160 million tonnes (Mt) CO2 avoided across the portfolio. In this scenario, new retirement dates for all 10 CFPPs in the analysis fall within a relatively narrow time frame: between 2038 and 2042 for the oldest three plants, 2037 and 2041 for the middle three, and 2039 and 2041 for the newest. This close clustering is because of the 2050 cut-off date for all plants in the BAU case. If a plant’s 40-year lifespan runs beyond 2050 (for example, the plant was commissioned in 2015), it is considered the plant will close anyway in 2050. As such, the plant’s remaining economic life will be 25 years (from a transaction date of January 2025), rather than 30 years. As such, possible retirement dates are similar to older plants in the analysis (for example, those commissioned in 2010), whose 40-year life expires in 2050 and which therefore also have 25 years of remaining economic life. Concessional financing requirements in this scenario are very high. Retiring all 10 plants in this way would require a total of $1.3 billion in concessional debt, out of a total of $4.2 billion in new debt. Abatement impact by scenario FIGURE 6 Source: Coal-to-Clean Initiative simulations, with data from Transition Zero2301020304050 CFPP 1 (200 M W)CFPP 2 (600 M W)CFPP 3 (100 M W)CFPP 4 (550 M W)CFPP 5 (250 M W)CFPP 6 (350 M W)CFPP 7 (300 M W)CFPP 8 (400 M W)CFPP 9 (300 M W)CFPP 10 (350 M W) Maximum possible gearing + maximum possible tenor extension + 2% concession in debt rate Maximum possible gearing + maximum possible tenor extension + no concessional financing No additional gearing + maximum possible tenor extension + 2% concession in debt rateProjection for CO2 abated (in megatonnes)Scenario 1 Scaling Financing for Coal Phase-out in Emerging Economies 12