JPMorgan Pursues Funding Opportunities to Shut Down Coal Plants

JPMorgan Chase & Co. is taking bold steps to finance the early closure of coal-fired power plants, joining a growing number of global banks reassessing their involvement in the world’s dirtiest fossil fuel, as reported by several news agencies. According to Andre Abadie, Managing Director at JPMorgan’s Centre for Carbon Transition, the bank is actively exploring several viable projects aimed at phasing out coal plants ahead of their expected operational life.

Coal continues to dominate energy generation in developing economies, powering 36% of the world’s electricity. However, the continued reliance on coal is a major barrier to achieving the global climate goals outlined in the Paris Agreement. If coal plants remain in operation, they would push the world past the critical 1.5°C temperature increase target. Notably, fewer than 23% of the world’s largest financial institutions currently restrict funding for coal projects, despite the urgent need to curb emissions.

At the COP29 summit, Fatih Birol, Executive Director of the International Energy Agency (IEA), stated, “Without solving this problem of coal, we have no chance of reaching meaningful climate targets.” In response, JPMorgan is actively pursuing ways to support the global shift from coal to cleaner energy, recognizing that coal’s environmental impact must be addressed if the world is to meet its climate objectives.

The challenge, however, is substantial. Many coal plants in developing nations are relatively new and still have decades of operation left, making it financially and logistically difficult to close them early. As a result, financing solutions for these phase-out projects are being reshaped. Global coal finance groups, including the Glasgow Financial Alliance for Net Zero and the Coal Transition Commission, have called for regulatory changes to ease the transition and attract more capital to phase-out efforts.

Ramesh Subramaniam, Director General of the Asian Development Bank, highlighted the difficulty of making these decisions in a climate of uncertainty. He explained that policymakers face risks of being blamed for future missteps, urging a clear legal framework to protect them when making decisions about coal projects.

JPMorgan’s Abadie emphasized that successful transitions will require access to "blended finance"—publicly supported funding models that de-risk projects and make them financially viable. This approach would also involve offering low-interest loans to coal producers willing to shutter plants early, enabling the transition to cleaner energy sources.

Meanwhile, Standard Chartered is investigating the role of carbon credits to incentivize coal plant closures, although concerns about greenwashing have cast doubt on the effectiveness and transparency of these credits in achieving the intended environmental goals.

JPMorgan’s strategic pivot marks a critical shift in the financial sector’s role in addressing climate change, and with operations already in motion, the bank is setting a precedent for future coal phase-out financing globally.