Massive price tag on phasing out coal burning

Two trillion dollar price tag to phase out coal burning - Newsreel
The world will need to find $2 trillion to compensate communities who suffer from the phasing out of coal burning. | Photo: REC Visual (iStock)

Phasing out coal to meet international climate targets would cost at least $US 2 trillion, a new assessment has concluded.

Researchers at Chalmers University of Technology in Sweden and Central European University in Austria say that compensation already committed amounts to $200 billion.

“But it excludes China and India, the two largest users of coal that currently do not have phase-out plans,” Science Daily reported.

“The study shows that if China and India decide to phase out coal as fast as needed to reach the Paris climate targets and pay similar compensation, it would cost upwards of $US 2 trillion.”

The research found that more than half of the in-place plans to phase out coal burning around the world included provision for compensation to mitigate the impact on communities that depended on coal.

“Many governments, mostly in Europe, have begun to phase-out coal, but these policies can harm companies, risk unemployment and lead to economic hardship for coal-dependent regions,” the research report said.

“In response, some countries have adopted what are known as ‘just transition’ strategies, where governments support negatively impacted companies, workers, and regions.

“Germany for example, has pledged over EUR 40 billion to support those affected by coal phase-out.”

In total, 23 countries with 16 percent of the world’s coal power plants have pledged compensation. The researchers found the compensation was still cheaper than the carbon prices that would need to be paid in Europe.

“A big question thus is where such large sums of money would come from,” Science Daily said.

“Today about half of all compensation is funded from international sources such as Just Energy Transition Partnerships supporting coal phase-out in Vietnam, Indonesia and South Africa.

“International finance might also be needed to support future coal phase-out compensation in major coal consuming countries. However, the researchers point out that the estimated amounts of compensation for China and India alone are comparable to the entire international climate finance pledged in Paris, and larger than current international development aid to these countries.”