Endorsement for World’s first Coal-to-Clean Pilot Project in Philippines

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DUBAI, UAE, December 4, 2023 – The Coal to Clean Credit Initiative (CCCI), which has support from The Rockefeller Foundation, announced a new collaboration with ACEN Corporation to explore a pilot project in the Philippines that would leverage carbon finance to phase out a coal-fired power plant and replace it with renewable energy, while supporting livelihoods of vulnerable people. This first-of-its-kind project will seek to inform plans for the CCCI to help phase out coal plants around the globe in line with the Paris Agreement. CCCI and ACEN are working with the Monetary Authority of Singapore (MAS) to advance the potential project.

Ashvin Dayal, The Rockefeller Foundation’s SVP of Power and Climate, Erica Francia, President & CEO of ACEN Corporation, and Ravi Menon, Managing Director of the Monetary Authority of Singapore – signing ceremony in the New Zero World Pavilion at COP28

“If the world does not break its overreliance on coal, current and planned coal-fired power plants will release 273 billion tons of carbon dioxide over their operational lifetimes and trigger a catastrophe for our planet and the people living on it,” said Dr. Rajiv J. Shah, President of the Rockefeller Foundation. “To retire coal plants, avoid those emissions, and create jobs, we need to create the right incentives for asset owners and communities and mobilize additional finance. This innovative CCCI agreement will pilot a coal-to-clean credit methodology in the Philippines, one critical step toward breaking that overreliance and building a better future.”

The project, the South Luzon Thermal Energy Corporation (SLTEC) coal plant, would become the world’s first coal-fired power plant to leverage carbon credits to enable its early decommissioning. While financial tools are already in place to support the early retirement of coal-fired power plants and their replacement with clean power, these are challenging to deploy in emerging markets and developing economies (EMDEs). The partners will explore the viability of an early retirement and repurpose the plant towards cleaner energy options as early as 2030, a decade ahead of its current retirement date.

Launched in June 2023, CCCI’s ‘coal-to-clean’ credits will aim to incentivize a just transition away from coal plants to clean energy in EMDEs, while also generating funding to support just transition plans that would invest in routes to new employment, entrepreneurship, and reskilling for workers in communities that have traditionally relied on the fossil fuel economy for their livelihoods.

“Today’s development marks a critical contribution to accelerating a global energy transition. Without a rapid and proactively managed transition away from coal-fired power, the world will not meet its climate goals; the urgency of solving this problem cannot be understated. ACEN is proud to be working with The Rockefeller Foundation’s Coal to Clean Credit Initiative and the Monetary Authority of Singapore to develop this world-first project,” said Eric Francia, President & CEO of ACEN Corporation, which has ~4,500 megawatt (MW) of attributable capacity in the Philippines, Australia, Vietnam, Indonesia, and India, with a renewable share that is among the highest in the region.

CCCI is also helping countries to work together and raise their climate ambitions through the growth of regulated carbon markets under the Paris Agreement.

“The economics of phasing out coal fired power plants are challenging. There is a need for effective market-based financing solutions, including the use of transition credits to improve the economic case of retiring these plants early and we are pleased to collaborate with ACEN Corporation and Climate Smart Ventures to pilot the use of CCCI’s methodology. Through the pilot transactions that MAS has convened, we hope to road-test and learn from different approaches that can catalyze the use of high-integrity transition credits to support the early retirement of coal plants on a significantly larger scale,” said Gillian Tan, Assistant Managing Director and Chief Sustainability Officer, Monetary Authority of Singapore

CCCI is working with the COP28 Presidency to secure interest and engagement from more sovereign buyers and gain high-level interest from power producers in EMDEs, making the first use of ‘transition credits’ a nearer-term reality.

The work on the pilot is subject to CCCI’s project methodology being approved by Verra, a leading global carbon standard, the conclusion of the public consultation, and its application to the pilot project. The methodology enables organizations seeking to develop bespoke coal-to-clean energy projects that prioritize the needs of local communities, and issue transition credits to global buyers.

Once finalized after the consultation, launched today and running from December 4 2023 to January 16 2024, CCCI’s methodology would be expected to facilitate one of the first transactions of transition credits in the global carbon markets, either for voluntary use or compliance purposes. As such, it would help with the operationalization of Article 6 of the Paris Agreement while supporting sovereign efforts to limit global warming to 1.5°C.

“The transition from coal-to-clean energy in emerging markets is stuck,” added Dr. Joseph Curtin, Managing Director of the Power and Climate team at the Rockefeller Foundation. “We need new solutions that can support the retirement of a fleet of coal fired power plants across the globe. Today’s announcement could be the first of many, if we can prove it’s possible, which we hope to do next year.”

“Transitioning Asia out of its dependence on coal fired power urgently requires a diverse set of solutions carefully designed for the realities of the region but deployed to achieve high-integrity results that deliver real-world emissions reductions. As a strong advocate of ‘learning-by-doing’, Climate Smart Ventures is ready to support this pioneering initiative among our partners CCCI, MAS and ACEN to identify and model suitable use cases where transition credits can be right-sized to incentivize Asia’s power portfolio owners to raise and execute their coal to clean ambitions in the shortest time possible,” says Lawrence Ang, Managing Partner of Climate Smart Ventures.