The Coal to Clean Credit Initiative (CCCI), with help from The Rockefeller Foundation, teams up with ACEN Corporation to look into a pilot project in the Philippines, it revealed at the COP28 climate summit in Dubai. This plan aims to use credits earned from reducing carbon emissions to shut down a coal-powered plant.
COP28, happening until December 12, is the largest conference to find solutions to shift the world away from fossil fuels. The consortium wants to replace the carbon-intensive plant with renewable energy while also helping out people who might be struggling. It is the first of its kind, aiming to move away from coal plants following the Paris Agreement.
CCCI and ACEN are working with the Monetary Authority of Singapore (MAS) to move this plan forward.
From Coal to Clean: A Paradigm Shift
If the world keeps relying too much on coal, these plants will release a massive amount of carbon emissions. In particular, current and planned coal-fired power plants will emit 273 billion tons of carbon dioxide over their lifetimes, according to the Rockefeller Foundation’s President, Dr. Rajiv J. Shah.
Source: International Energy Agency
As per the International Energy Agency’s Net Zero Emissions by 2050 scenario shown above, the world needs about 9% annual reduction in unabated coal-fired generation between 2022 and 2030.
Achieving such massive feat requires encouraging plant owners and communities to retire coal plants. And the CCCI agreement would be a way to do it in the Philippines.
The project is focused on the South Luzon Thermal Energy Corporation (SLTEC) coal plant. It could be the first coal plant in the world to use carbon credits to shut down early.
While there are financial methods to support closing coal plants and switching to clean energy, it’s tough to use these methods in developing countries. The partners are checking if they can retire this plant early and change it to cleaner energy sources by 2030. That’s 10 years earlier than its originally planned retirement.
CCCI started in June 2023 with the aim to reward moving away from coal and shifting to clean energy in developing countries. They will incentivize such transition through ‘coal-to-clean’ credits, also called ‘transition credits’.
Accelerating Energy Transition with Carbon Credits
In a similar direction, the Asian Development Bank (ADB) announced that it had tentatively agreed to shut down an Indonesian power plant much earlier than scheduled through its Energy Transition Mechanism (ETM).
The CCCI plans to work with programs like the ETM to accelerate the closure of power plants in the Philippines by using the credits. Vikram Widge, formerly in charge of carbon finance at the World Bank and involved in this initiative, shared this information.
A preliminary method for verifying these coal-to-clean credits has been put forward for public consultation. Verra, the leading global carbon standard, will approve the methodology.
The method allows organizations to create customized projects shifting from coal to clean energy. These projects focus on what local communities need and then offer transition credits to buyers worldwide.
After public consultation, which runs until January 16, 2024, CCCI’s method is likely to be completed. Once finalized, it’s expected to enable one of the initial transactions involving transition credits in the global carbon markets.
Entities can use these carbon credits voluntarily to mitigate their emissions or for meeting certain regulations. This initiative would assist in putting into action Article 6 of the Paris Agreement. It supports countries’ efforts to control global warming and keep the temperature rise within 1.5 degrees Celsius.
Global Collaboration for Climate Resilience
Authorities are aiming for stricter evaluation of carbon credits, as many environmental groups have criticized them for enabling the ongoing use of fossil fuels instead of decreasing emissions.
During COP28, numerous representatives suggested that establishing a global carbon price could be a part of the solution. Businesses argue that this could offer clarity for planning, but creating such a price has been challenging for many years.
Highlighting their innovative collaboration, Eric Francia, President & CEO of ACEN Corporation remarked during the announcement:
- “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 Corporation operates around 4,500 megawatts (MW) of energy in the Philippines, Australia, Vietnam, Indonesia, and India. Its renewable energy contribution is one of the highest in the region.
The CCCI news aligns with the Energy Transition Accelerator (ETA) set to launch in April. The ETA, created by the Rockefeller Foundation and other organizations, shares a similar goal of speeding up the move away from coal. Days ago, the philanthropic organization announced a target to bring its $6 billion endowment to net zero emissions by 2050.
The ETA plans to achieve the clean transition by using what they claim are top-quality carbon credits. Their initial estimates suggest this approach could generate over $200 billion in transition finance by 2035.
CCCI is teaming up with the COP28 Presidency to attract more interest from governments and get power companies in developing countries more involved. This effort aims to make the use of ‘transition credits’ a reality in transitioning the world towards cleaner and sustainable energy.
Source: carboncredits.com
