ACEN Corp., the listed energy platform of the Ayala Group, said Tuesday it has partnered with The Rockefeller Foundation’s Coal to Clean Credit Initiative and the Monetary Authority of Singapore to explore a major step towards accelerating the phase out of coal plants in line with the Paris Agreement.
The pioneering initiative between ACEN, CCCI and MAS seeks to develop the world’s first Transition Credit, or coal-to-clean pilot project, that would leverage carbon finance to phase out a coal-fired power plant and replace it with renewable energy.
Transition credits will enable ACEN to further accelerate the transition of 246-megaWatt coal-fired power plant of South Luzon Thermal Energy Corp. to clean technology as early as 2030. In November 2022, ACEN implemented the market-based Energy Transition Mechanism that involved its divestment of SLTEC and early retirement of the coal plant for transition to cleaner technology by 2040 when it completes its 25-year operation.
ACEN said the groundbreaking initiative could reduce 15 to 25 years’ worth of emissions, or up to 50 million metric tons of carbon dioxide cumulative emission reduced, given that coal plants typically operate for 40-50 years.“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 and chief executive officer of ACEN, in a statement.
“If the world does not break its over reliance 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 Shah, president of the Rockefeller Foundation. He said the creation of the right incentives is essential to retire coal plants and avoid those emissions.
Complementing this initiative is MAS’ Transition Credits Coalition, or TRACTION, that will test the use of transition credits in early retirement of coal-fired power plants transactions. Supported by close to 30 members and knowledge partners across key stakeholder groups, TRACTION will study the challenges and propose solutions to scale the early retirement of coal-fired power plants in Asia.
“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, MAS assistant managing director and chief sustainability officer.The pilot project will build on the concepts laid out in the working paper jointly published by MAS and McKinsey & Company in September 2023. Climate Smart Ventures, an advisory firm focused on energy transition, will be coordinating the pioneering initiative.
Coal fired power plants account for about 29 percent of energy related global carbon emissions, according to the International Energy Agency. Per IEA, to achieve a net zero scenario by 2050, power generation from CFPPs should be reduced by around 55 percent by 2030, from 2022 level.
Southeast Asia, which has the fourth largest installed coal plant capacity globally, has among the world’s youngest coal fleet with an average age of under 15 years. With strong electricity demand growth in key markets like Indonesia, Vietnam and the Philippines, reducing coal generation within the next two decades will be a major challenge.
