An alliance of more than 20 potential buyers of a novel form of carbon credits designed to close coal plants in Asia early launched this week.
Called the Kinetic Coalition, the group of companies including consumer goods firm PepsiCo, tech giant Amazon and credit card company Mastercard plan to ultimately offset their emissions by buying transition credits. The group is organised by Washington-based think tank Centre for Climate and Energy Solutions (C2ES).
The launch reflects a trend of growing support for the asset class known as transition credits, and its proponents will now start the next phase of work – ensuring there is a steady stream of demand for these credits, said a Rockefeller Foundation representative at the Ecosperity conference in Singapore on Wednesday.
“As we begin to get more confident about the supply of high-integrity transition credits, we are now pivoting to focus on generating hundreds of millions of tonnes in demand for them by 2030,” said Joseph Curtin, managing director of the American philanthropic foundation’s power and climate team.
Speaking on a panel at the annual climate summit, Curtin shared that the foundation is looking to map out potential sources of demand for the credits.
His comments closely follow the endorsement of transition credits by key standards body Verra, which launched a methodology for generating the credits from retirement of coal assets at the same forum on Tuesday.
The rules are the world’s first for this particular asset class and will enable companies to monetise the reduction of emissions delivered when a coal plant is shuttered earlier than originally intended; they are also aimed at persuading buyers of the credibility of these credits.
Coal plants are typically much younger in Asia than in other major regions. Shuttering a 1-gigawatt plant about five years early would require about US$310 million of financing, according to a calculation done by Singapore’s central bank and McKinsey & Co in 2023.
Curtin characterised Verra’s backing of the rules, which the Rockefeller Foundation helped draft as it leads the global Coal to Clean Credit Initiative (CCCI), as a “milestone update”.
Curtin said the corporations that are part of the Kinetic Coalition have expressed interest in buying transition credits and are keen to invest in clean energy in emerging economies. He shared that the group is already talking to Philippine energy group ACEN, which is trialling CCCI’s methodology to bring forward the decommissioning date of its coal plant by a decade.
An operator at the SLTEC plant uses a thermal scanner to monitor the temperature of the coal to prevent fires and other issues. Image: ACEN
Since 2023, Rockefeller Foundation, together with ACEN and the Monetary Authority of Singapore (MAS), have been developing new rules for early plant closure and applying them to a pilot project at a 246-megawatt coal plant that ACEN aims to shutter by 2030, ahead of its scheduled closure in 2040. The foundation’s broader goal is to support the retirement of 60 coal plants globally, many of them in Asia, by 2030, and replace them with renewable energy.
Curtin said that the proposition might sound simple, but when the group started its work to push for transition credits a few years ago, implementation was impossible. Now, with boosted confidence in the integrity of this asset class, the foundation is ready to start on its next phase of work to “mobilise demand” and build a whole ecosystem for the trading of such credits on key exchanges, he said.
On the voluntary carbon markets front, Curtin said that proponents of transition credits will have to work with standard-setters to ensure that “existing accounting frameworks do not stand in the way of impact”. He did not provide further details but said that specificities of the region should be reflected and that updated standards should be “anchored on what is needed for the energy transition in Asia”.
Verra’s support of transition credits this week comes as controversy persists over the efficacy of similar mechanisms used by polluters in their climate accounting, which critics say do little to cut emissions.
Earlier in the week, on another panel discussion, Curtin said that although Verra’s approved methodology is intended for retiring grid-connected coal facilities, he does not rule out transition credits being used to shutter captive coal plants in the future.
The Rockefeller Foundation is also currently working with the International Energy Agency (IEA) to evaluate if and how transition credits can strengthen the business case for early coal retirement. An update is expected by end-2025, said Curtin.
This week, new data from the organisation showed that shutting down 60 coal plants worldwide could unlock US$110 billion in public and private investment in clean energy, while generating 29,000 new jobs. Its estimates also show that if the goal is met, consumers in emerging economies could save up to US$8.3 billion annually in power costs.
