Verra recently approved a landmark methodology to issue carbon credits for the early retirement of coal-fired power plants, on the condition they’re replaced with renewables and deliver verified emissions reductions. The Coal-to-Clean Credit Initiative (CCCI) aims to support the phaseout of up to 60 coal plants by 2030, with pilots expected in Asia and Africa.
This is the first time a carbon crediting framework has directly tackled fossil fuel infrastructure. It’s a big moment, and a big test. Can carbon markets really help fund the energy transition in places where coal still dominates the grid?
The Tension: Clean Goals vs. Energy Reality
Coal is still the largest source of energy-related CO₂ emissions globally. Unlike reforestation, retiring a coal plant delivers immediate, measurable impact. But for many countries, coal isn’t just dirty. It’s also reliable, cheap, and available.
India, for example, plans to increase coal capacity from 222 GW to 302 GW by 2032 to meet growing power demand (Reuters). Meanwhile, World Bank data shows over 600 million people in Sub-Saharan Africa still lack access to electricity.
This is where the concept of a “just transition” becomes non-negotiable. You can’t talk about early coal closures without addressing the livelihoods, energy security, and industrial growth those plants support. Without serious investment and viable alternatives, early retirement isn’t just hard, it’s unfair.
Can Carbon Markets Really Finance a Just Transition?
There’s some precedent. Just Energy Transition Partnerships (JETPs) have channeled $8.5 billion to South Africa and $20 billion to Indonesia to support national energy transitions. These funds are earmarked for grid upgrades, clean energy development, and worker re-skilling, not just emissions cuts.
Meanwhile, the World Bank’s “Mission 300” initiative aims to provide electricity to 300 million Africans by 2030, showing how development finance can complement climate ambition.
Still, credible concerns remain. Reports from TERI and others warn that unless communities and workers have a seat at the table, transition finance risks being symbolic. Done badly, it’s just greenwashed austerity. Done right, it’s one of the most powerful tools we have.
Why the Design Will Make or Break This
If this becomes a race to the cheapest avoided ton, we’ve missed the point.
To succeed, coal crediting schemes must be underpinned by transparent methodologies, robust baselines, and strong local governance. They’ll need to balance climate integrity with real-world feasibility, and avoid pushing transition risks onto those least able to bear them.
Some observers are watching to see if Article 6 rules or voluntary buyers will step up with real capital. Others are asking whether high-emitting countries should shoulder more of the financial burden for these schemes.
This moment, where finance, development, and decarbonisation collide, is messy by nature. But it’s also where carbon markets might finally start proving their value.
If they get it right.