The Rockefeller Foundation has launched a carbon finance scheme to help phase out coal power plants in developing countries.
The foundation is looking to sign up 60 projects in the next five years for early coal plant shutdowns, it said on Wednesday, after its rulebook was given the go-ahead.
Around 2,000 coal-fired power plants need to be decommissioned from now until 2040 in order to meet global climate targets, the International Energy Agency says, but only 15% are covered by decommissioning pledges.
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The Foundation’s Coal to Clean Credits Initiative (CCCI) is one of several schemes under development that aim to use carbon finance to help close them earlier than scheduled and replace them with renewable power.
“That target of 60 projects by 2030 is our overall goal, our ambition,” said Joseph Curtin, who runs the Rockefeller Foundation’s “coal to clean” programme.
In Singapore on Tuesday, carbon standards organisation Verra launched CCCI’s methodology for determining which projects are eligible and how emission reductions from early coal plant shutdowns will be calculated, allowing them to generate carbon credits.
Philippine plant may be first project
The first project to use the methodology will be the South Luzon Thermal Energy Corporation (SLTEC) plant in the Philippines, with the transaction expected to be completed next year.
“Obviously if we can close one transaction – and we’re getting much closer – we think that will have a very strong impact on the market and will hopefully reverberate across the region and send a signal that this is indeed possible.”
Curtin said his team has identified around 1,000 coal-fired plants in developing countries that would be eligible under the methodology.
The 60 project target could attract $110 billion in public and private investment by 2030, he said, citing research commissioned by the foundation.
The early retirement of SLTEC is backed by Philippine energy firm ACEN together with Singapore clean investment group GenZero, the infrastructure conglomerate Keppel, Japan’s Mitsubishi and its subsidiary Diamond Generating Asia.
Revenue from carbon credits will be used to cover foregone cashflows brought about by the closure, help pay for the energy storage needed to support renewables and protect the interests of local workers and communities, said Eric Francia, ACEN’s chief executive.
CCCI went through seven rounds of consultations on its methodology, partly to allay concerns of environmental groups, who say carbon finance should not be used to bail out coal asset owners.
“The risk with this is how do you determine you are not giving finance to something that was a stranded asset, that wasn’t going to be viable in the future?” said Jonathan Crook of Carbon Market Watch, a research group.
The CCCI initiative’s criteria will only select projects that are profitable and owned by companies or countries that have made firm “no new coal” commitments, Curtin said.
While there is a moratorium on new coal plants in the Philippines, new facilities approved before the ban are still expected to come on line in the next few years.
But the early retirement of SLTEC would still deliver progress on the energy transition, ACEN’s Francia said.
“Of course, we need to manage the perception, which is admittedly not good, but we look at the substance, and that is really the equation here,” he said.
- Reuters with additional editing by Jim Pollard
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