In a pioneering initiative to accelerate the transition to clean energy in Southeast Asia, three organizations – ACEN, GenZero and Keppel – have agreed to work towards the early retirement of a coal-fired power plant in the Philippines.

The parties have signed a memorandum of understanding in Manila to jointly undertake a development study to explore the use of transition credits (TCs) to accelerate the retirement of the South Luzon Thermal Energy Corporation (SLTEC) coal-fired power plant (CFPP) in Calaca, Batangas province, and replace it with a clean energy despatch facility.

The origination and sale of TCs will help to accelerate the decommissioning of the 246-megawatt SLTEC CFPP by 10 years (i.e., 2030). When completed, the project is expected to be one of the first converted CFPPs in the world to generate TCs.

CFPPs are the single largest source of carbon emissions globally. Southeast Asia is home to the fourth largest CFPP fleet in the world, which is also among the youngest with an average age of less than 15 years. Thus, the early retirement of CFPPs such as SLTEC is seen as a critical step for the region towards achieving the net-zero targets by 2050 under the Paris agreement.

“This project will serve as a pathfinder and pave the way for more coal-fired power plants to be retired and replaced with cleaner energy facilities,” says Cindy Lim, chief executive officer of Keppel’s infrastructure division. “The partnership provides us the opportunity to harness both technological and financing solutions to accelerate the shift towards low-carbon and renewable energy sources in the Southeast Asia region.”

GenZero CEO Frederick Teo adds: “Cross-border collaboration is critical to achieve a just energy transition in Southeast Asia and help our economies achieve our decarbonization objectives. Transition credits can help crowd in catalytic financing for such coal-to-clean energy initiatives.” GenZero, founded by Singapore’s Temasek, is an investment platform company focused on accelerating decarbonization globally.

Clean energy development

The project will also explore the development of an integrated renewables and energy storage system consisting of solar power and battery storage.

In retiring the SLTEC CFPP, the partners will also take into account environmental, social and governance (ESG) considerations and best practices. This includes the training of workers and communities, asset repurposing, and the decommissioning of the plant in a manner that minimizes the impact on communities and the local environment.

The project will be carried out in collaboration with the Rockefeller Foundation’s Coal to Clean Credit Initiative and the Monetary Authority of Singapore’s Transition Credits Coalition.

The project could also come under Article 6 of the Paris agreement through collaboration between the Philippines and Singapore. Under Article 6, countries can transfer carbon credits earned from the reduction of greenhouse gas emissions to help one or more countries meet their climate target.

At COP28 in Dubai last year, the Singaporean government said it was prepared to offtake TCs provided they meet its standards for high environmental integrity.