[ASIA]
SINGAPORE – Japanese conglomerate Mitsubishi Corporation on May 7 joined Singapore’s Keppel and investment platform GenZero in a climate initiative that aims to retire a Philippine coal plant early using funds from a new type of carbon credit backed by the Monetary Authority of Singapore (MAS).
The initiative, if successful, could be a model used to shut down dozens of other coal plants early around the globe, especially in Asia which is heavily reliant on the polluting fuel.
The aim is to retire a 246 megawatt (MW) coal plant in Batangas province, South Luzon, by 2030 – ahead of its scheduled closure in 2040 – and replace it with renewable energy and battery storage. Shutting it down a decade early could save 19 million tonnes of planet-warming carbon dioxide (CO2) emissions – and cut local air pollution.
The catch is that closing the plant early is costly. Replacing it with green power generation and new power lines, as well as compensation for the lost 10 years of electricity income, would cost over US$1 billion (S$1.29 billion), said Mr Eric Francia, president and chief executive of the plant’s owner Acen, which is the listed energy platform of the Ayala Group.
“We’re still finalising the numbers, we’re talking about US$1.5 billion-plus overall cost,” he told The Straits Times at the May 5 to 8 GenZero Climate Summit 2025 at the Sands Expo and Convention Centre.
Fully replacing the coal plant with the same level of on-demand power would require 1,000MW of solar, 250MW of wind and 1,000MW of battery energy storage, according to The Rockefeller Foundation, which is also involved in the project.
To help share the cost, Acen in 2024 teamed up with the Temasek-owned GenZero and Keppel as equity partners.
On May 7, Mitsubishi and its power generation subsidiary Diamond Generating Asia joined as the new collaborators – the hope is that with Mitsubishi joining, the credits might eventually be able to be used in Japan’s emissions trading scheme. The partners want to pioneer the use of transition credits to help fund the shutdown of the Acen plant.
Transition credits aim to monetise the emissions savings from the early closure of coal plants. Revenue would come from the sale of high-integrity carbon credits to companies or governments, with each credit representing a tonne of emissions avoided by shutting a power plant early.
The credits act as a de-risking tool for green financing. Without the credit revenues, the economics for the early closure of the plant would be hard to justify, Mr Francia said.
Coal plants have a lifespan of 40 to 50 years, and investors recoup their money via long-term power-purchase contracts with utilities. Carbon finance can help bridge the gap in revenue caused by a plant’s early retirement by funding the revenue loss and the costs of swopping coal power for renewable energy.
In South-east Asia, coal power plants are the main source of electricity and a major source of air pollution and carbon emissions driving climate change. Many of the plants are young, with an average age of 15 years, meaning keeping them running to the end of their useful life would be highly polluting.
The Singapore government regards transition credits as a key way to help accelerate the green transition in the region. The credits are nascent but have strong support from MAS, other financial institutions and large corporates.
In December 2023, MAS launched the Transition Credits Coalition (Traction), which is backed by nearly 30 members. The coalition is studying ways to use and scale up deployment of the credits.
And since 2023, MAS, Acen and The Rockefeller Foundation have been developing a methodology for coal transition carbon credits under the foundation’s Coal to Clean Credit Initiative (CCCI), which aims to shut down dozens of coal plants early across the globe.
On May 6, Verra, a non-profit certification body that issues verified carbon units for carbon reduction projects, officially approved the CCCI’s methodology, the first of its kind.
Mr Francia said it was likely the Acen project will use the CCCI transition credits methodology but that final approval was still needed among all the partners.
He said he hoped the Singapore government might be among the buyers of the credits and linked the future price of the credits to the Republic’s estimated carbon tax price of $50 to $80 per tonne of emissions in the coming years. “We’re anchoring this to the Singapore carbon tax, hopefully we would be closer to the lower end of the $50 to $80 range,” he said.
The Rockefeller Foundation says the goal of the CCCI and its newly approved methodology is to retire 60 coal plants globally, many of them in Asia, by 2030.
Newly released figures from the foundation shows that shutting down that many could unlock US$110 billion in public and private investment in green energy, while preventing 9,900 early deaths and generating 29,000 new jobs.
The Powering Past Coal Alliance, which works to hasten the transition to clean energy, said it welcomed the Philippines coal plant initiative. The alliance is a coalition of over 180 governments, businesses and organisations, including Singapore.
“This project showcases the potential of carbon credits to fund early plant closures and help achieve a timely, secure and just transition out of coal,” said Dr Julia Skorupska, head of the alliance’s secretariat.
“Accelerating the transition from coal to clean is one of the most important steps we can take to address climate risks and secure the long-term prosperity in South-east Asia,” she told ST.
Large US corporations are also showing keen interest in transition credits, said Dr Nat Keohane, president of Washington-based think-tank the Centre for Climate and Energy Solutions (C2ES). He announced the launch of the Kinetic Coalition at the summit on May 6.
He told ST that the coalition, which is hosted by C2ES acting as its secretariat, included 20 large potential buyers of the credits including PepsiCo, Amazon, Mastercard and McDonald’s. The coalition aims to accelerate corporate investment in clean energy in emerging economies.
“Those 20 buyers are all saying, ‘We want to be part of this journey.’ The driver for them is always, how do we get clean energy and clean energy systems in our value chains,” he said.
- David Fogarty is deputy foreign editor at The Straits Times and senior climate writer. He also covers the environment, in areas ranging from biodiversity to plastic pollution.
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[NEWS]
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