Utilities are struggling to find insurance to build new coal power outside China, according to a new report by the Insure Our Future (IOF) campaign and Korean non-profit company Solutions for Our Climate.
The insurance contracts for Korea’s national power utility (KEPCO), also reveal that it is having to turn to smaller, inexperienced companies to secure cover for coal power plants that are already in operation as growing numbers of mainstream insurers withdraw from the sector.
The IOF campaign was launched in 2017 and since then at least 39 insurers have either ended or limited their cover for new coal projects. However, the report confirms that even prominent international brands like Hannover Re (Germany), SCOR (France), QBE (Australia) and Helvetia (Switzerland) continue to underwrite existing coal plants, supporting companies like KEPCO that have no plans to phase out coal in line with climate targets.
Coal is the biggest single source of carbon emissions. To stay on track for the 1.5°C Paris Agreement climate target, consumption of coal must fall by 9.5% per year. No investment in new fossil fuel production is consistent with that target, according to the International Energy Agency, yet it warns that coal demand could reach all-time highs in 2022 and stay at that level until 2024.
The insurance industry is under growing pressure to align its policies with 1.5°C. UN secretary general Antonio Guterres in 2021 had told the Insurance Development Forum, “We need net zero commitments to cover your underwriting portfolios, and this should include the underwriting of coal – and all fossil fuels.”
Asia is at the centre of global coal power generation and development, accounting for 91% of all plants planned or in construction worldwide (414GW out of 457GW) and 73% of operating coal plants (1,518GW out of 2075GW). M