Where it stands: For fossil fuel operators, higher expected rates of investment return are a form of climate-related transition risk — the threat of lower asset values and higher operating costs as societies decarbonize. Growing demand for cleaner energy sources —as much as $10 trillion through 2050 — continues to pull investment dollars away from coal and into less risky projects.

• Between 2015 and 2018, investors' minimum rates of return for previously finished coal projects were 16%. These so-called hurdle rates now run as high as 40% for coal, compared to roughly 10% for wind and solar or 15%–20% for oil.

Between the lines: Misjudging the risks of the energy transition can be costly.

• GE lost shareholders $193 billion on investments in its natural gas turbine and coal business. Although natural gas is a cleaner fuel subject to less transition risk than coal, the demand for both fossil fuels fell short of GE's lofty expectations, in part because of the rise of wind, solar and other clean energy options.
• Over 113 globally significant financial institutions are now restricting access to finance for coal — another sign of the emerging consensus that it will continue to lose market share as the global community grapples with the need to address climate change.

Yes, but: The Oxford Institute study only interviewed investors in the U.S. and Europe. Asian investors continue to finance new coal plants and likely have different expected returns, though several Asian financial institutions have recently announced stricter coal policies.

The bottom line: Investors are already pricing in expectations for a transition to a cleaner energy mix, even as politicians have been slow to take corresponding actions.

Justin Guay directs global climate strategy at the Sunrise Project and advises the ClimateWorks Foundation.

Background: Private foreign investors seek high returns when foregoing safer investments in the West, so they are less likely to finance new coal plants in emerging markets if public financing is not available.

• That's why public money has been needed to help lower the risks of such projects, as China, Japan, South Korea and the U.S. have done across South and Southeast Asia.

What's happening: The Biden and Inslee plans would end financial support for new coal from agencies like the U.S. International Development Finance Corporation (USIDFC), the Export-Import Bank and the U.S. Trade and Development Agency, in addition to working with China and other OECD nations on their own commitments.

• Warren, in contrast, has focused on ending oil and gas lending from the Export-Import Bank and USIDFC and does not specifically address coal or OECD talks.

Flashback: The Obama administration had announced an end to coal finance, with some exceptions for the world's poorest countries, and negotiated limits on coal finance from export credit agencies with the OECD. It also worked with the World Bank on coal restrictions that were quickly adopted across most MDBs and development finance institutions (DFIs).

• Trump administration officials have called to reverse MDB coal finance policies, particularly at the European Bank for Reconstruction and Development.

What to watch: Inslee's plan proposes that the U.S. join the Power Past Coal Alliance (PPCA), a group of global governments working to phase out coal power, and use its leverage to pressure countries like China.

• Biden's current plan does not include phasing out coal by 2030, a prerequisite for PPCA membership, though criticism for not taking a strong enough stand on climate could push him to be more aggressive.

The bottom line: Limiting public financial support for new coal plants around the world— 338 GW of which are at a pre-construction stage — could keep developers from bringing all of those online.

Justin Guay directs global climate strategy at the Sunrise Project and advises the ClimateWorks Foundation.

Where it stands: More than 100 of the global financial institutions with at least $10 billion in assets under management have announced coal finance restrictions, according to the Institute for Energy Economic and Financial Analysis. These restrictions are gaining new momentum in Asia.

• China’s SDIC is the first major Chinese financial institution to exit the coal industry.
• Japan-based MUFG will stop financing new coal plants in Japan and abroad, according to leaked reports.
• Singapore’s largest bank, DBS, will stop financing new coal after 2021.
• Singapore-based OCBC, Southeast Asia’s second largest financier, will no longer finance new coal plants.

Yes, but: Loopholes remain a problem. The Van Phong plant in Vietnam will still be financed and constructed, and OCBC and DBS will likely finance two other plants in Southeast Asia that would similarly undercut these new policies.

What to watch: After China, Japan is the world’s largest financier of new coal plants overseas. In addition to MUFG, several of the country’s leading corporations have announced policies to end construction and development of new coal plants, including Marubeni.

• With the 2019 G-20 summit being held in Japan, and the country's environment ministry opposing new coal plants, Japanese institutions may be weighing support for the coal industry more heavily in the months ahead.

Justin Guay directs global climate strategy at the Sunrise Project and advises the ClimateWorks Foundation.