Coal to Clean Credit Initiative (CCCI) and ACEN Corporation Join Forces to Accelerate Energy Transition in the Philippines
Dubai, COP28 Climate Summit – The Coal to Clean Credit Initiative (CCCI), in collaboration with The Rockefeller Foundation, has announced a groundbreaking pilot project in the Philippines. The initiative aims to utilize credits earned from carbon emission reductions to facilitate the early closure of a coal-powered plant. This pioneering project, the first of its kind following the Paris Agreement, seeks to transition away from coal plants and promote renewable energy. The CCCI and ACEN Corporation are partnering with the Monetary Authority of Singapore (MAS) to drive this ambitious plan forward.
The reliance on coal as an energy source poses a significant threat to the environment, with coal-fired power plants projected to emit a staggering 273 billion tons of carbon dioxide over their lifetimes, according to Dr. Rajiv J. Shah, President of The Rockefeller Foundation. The International Energy Agency’s Net Zero Emissions by 2050 scenario emphasizes the urgent need for a 9% annual reduction in unabated coal-fired generation between 2022 and 2030. To achieve this monumental task, it is crucial to encourage plant owners and communities to retire coal plants. The CCCI agreement presents a viable solution for the Philippines.
The focal point of this project is the South Luzon Thermal Energy Corporation (SLTEC) coal plant. If successful, it could become the world’s first coal plant to utilize carbon credits to expedite its closure. While there are financial mechanisms available to support the transition from coal to clean energy, their implementation in developing countries has proven challenging. The CCCI and ACEN Corporation are exploring the possibility of retiring the SLTEC plant ahead of schedule and replacing it with cleaner energy sources by 2030, a decade earlier than originally planned.
Launched in June 2023, the CCCI aims to incentivize the shift away from coal and towards clean energy in developing countries through the use of “coal-to-clean” credits, also known as “transition credits”. The Asian Development Bank (ADB) has also committed to closing an Indonesian power plant earlier than scheduled through its Energy Transition Mechanism (ETM). The CCCI plans to collaborate with programs like the ETM to accelerate the closure of power plants in the Philippines by utilizing these credits. Vikram Widge, formerly in charge of carbon finance at the World Bank, confirmed this partnership.
To ensure the credibility of the coal-to-clean credits, a preliminary verification method has been proposed and is currently open for public consultation. Verra, the leading global carbon standard, will approve the methodology. This method allows organizations to create customized projects that facilitate the transition from coal to clean energy, tailored to the specific needs of local communities. Transition credits will then be offered to buyers worldwide. Following the public consultation period, which concludes on January 16, 2024, the CCCI’s method is expected to be finalized, enabling the initial transactions involving transition credits in the global carbon markets.
The voluntary use of these carbon credits by entities can help mitigate their emissions or meet specific regulations. This initiative aligns with Article 6 of the Paris Agreement, supporting countries’ efforts to combat global warming and limit temperature rise to 1.5 degrees Celsius.
As discussions at COP28 intensify, there is a growing call for stricter evaluation of carbon credits. Several environmental groups have criticized their use for enabling the continued reliance on fossil fuels instead of reducing emissions. Some representatives at COP28 have proposed the establishment of a global carbon price as part of the solution. Businesses argue that such a price would provide clarity for planning, but its implementation has proven challenging.
Eric Francia, President & CEO of ACEN Corporation, emphasized the significance of this innovative collaboration, stating, “Today’s development marks a critical contribution to accelerating a global energy transition. Without a rapid and proactively managed shift away from coal-fired power, we will fail to meet our climate goals. The urgency of solving this problem cannot be understated.”
ACEN Corporation operates approximately 4,500 megawatts (MW) of energy across the Philippines, Australia, Vietnam, Indonesia, and India, making a significant contribution to renewable energy in the region. The CCCI’s announcement aligns with the upcoming launch of the Energy Transition Accelerator (ETA) in April. Created by The Rockefeller Foundation and other organizations, the ETA shares a similar objective of expediting the transition away from coal. The philanthropic organization recently announced its commitment to achieving net-zero emissions from its $6 billion endowment by 2050. The ETA estimates that its approach, utilizing high-quality carbon credits, could generate over $200 billion in transition finance by 2035.
To garner further interest from governments and involve power companies in developing countries, the CCCI is collaborating with the COP28 Presidency. This joint effort aims to make the use of transition credits a reality, propelling the world towards cleaner and sustainable energy.
As the COP28 climate summit continues until December 12, it stands as the largest conference dedicated to finding solutions for shifting away from fossil fuels. The CCCI’s pilot project in the Philippines represents a significant step towards achieving this crucial goal.