Up to 19 million tons of carbon dioxide (CO2) emissions could be prevented by the first Coal to Clean Credit Initiative (CCCI) pilot project being considered in the Philippines, according to a recent announcement made by ACEN Corporation and The Rockefeller Foundation. The climate impact of using carbon finance to close the South Luzon Thermal Energy Corporation (SLTEC) coal plant in 2030—ten years before it is supposed to retire—and replace it with clean power and battery storage, while also preserving the livelihoods of those affected by the plant's early transition, was examined in an RMI-led assessment funded by The Rockefeller Foundation.
The report, which was revealed at Finance Asia's Transition Conference, evaluated SLTEC's eligibility for carbon finance using the CCCI's draft approach, which Verra is presently reviewing. It concluded that the project satisfies the draft methodology's eligibility requirements and that decommissioning by 2030 would not be feasible without carbon funding. Eric Francia, President & CEO of ACEN Corporation, said: “We are delighted to accomplish this important milestone of confirming the project’s eligibility under CCCI’s draft methodology. This paves the way to fully develop the just transition plan and engage with potential buyers of carbon credits. We will continue to build on this momentum and hopefully deliver a successful pilot project.” Dr. Rajiv J. Shah, President of The Rockefeller Foundation, said: “Today’s announcement is an important next step for CCCI and everyone counting on innovative technical and financial solutions to the threat of climate change. Right now, vulnerable people around the world are already experiencing the effects of climate change first and worst. This pilot can give us the necessary data, lessons, and hope to replicate a similar approach in other emerging markets and developing economies, potentially avoiding billions of tons of carbon emissions while providing clean, reliable electricity to those who need it most.” Approximately 190 billion tons of CO2 will be released by the more than 6,500 coal-fired units that are now in use worldwide during the course of their remaining operational lifetimes. Long-term contracts shield the majority from market competition. In response, CCCI is developing and testing a new methodology that makes use of carbon credit financing to support the lives and livelihoods of impacted workers while accelerating a managed and equitable phase-out of coal plants in emerging economies and encouraging their replacement with clean power. The initiative is being advanced by CCCI, ACEN, and the Monetary Authority of Singapore (MAS). The first evaluation of the SLTEC transaction's admissibility under the CCCI approach was headed by RMI, a technical partner of the Rockefeller Foundation. Comparing a 2040 retirement to one funded by carbon credits as early as 2030, it was discovered that the former could result in better financial, social, and environmental benefits. It also discovered that three cost categories would need to be covered by carbon finance: (1) expenses related to SLTEC's contract early retirement; (2) costs related to SLTEC's generation being replaced 100% cleanly; and (3) decommissioning and just transition needs. It was advised to conduct additional research in order to openly stress-test important presumptions. Since the announcement at COP28 that ACEN, CCCI, and MAS will be working together on a transition credits pilot, this is the first update on the collaboration. According to project schedules and continuing discussions with partners, ACEN aims to finish the Project Design Document (PDD) for the pilot by 2024, adhering to an authorized standard and methodology. ACEN completely separated from SLTEC in 2022 and is organizing the plant's early closure with the owners for this pilot project. The PDD will also include information on plans for the responsible decommissioning of SLTEC and the introduction of an inexpensive and dependable energy replacement for the CFPP (i.e., through wind, solar PV, and batteries), as well as programs to ensure a just transition for impacted communities and workers after a consultative process. By 2025, ACEN hopes to finalize buyer discussions and reach a financial close for this world’s first coal-to-clean carbon credit transaction. ACEN is the listed energy platform of the Ayala Group. The company has around 4,800 MW of renewable energy capacity in operations and under construction across its key markets in the Philippines, Australia, Vietnam, India, and Indonesia. As one of the fastest-growing platforms for renewable energy in the Asia Pacific region, ACEN aims to increase its renewable capacity to 20 GW by 2030. This goal will help provide clean, reliable, and affordable energy to more people. ACEN is committed to achieving its goal of 100% renewable energy in its generation portfolio by 2025 and becoming a Net Zero greenhouse gas emissions company by 2050. The Rockefeller Foundation is a pioneering philanthropy built on collaborative partnerships at the frontiers of science, technology, and innovation that enable individuals, families, and communities to flourish. We make big bets to promote the well-being of humanity.
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