Finance
May 08, 2025
New carbon credit framework boosts early coal plant retirement in Southeast Asia. (Photo: iStock)
Southeast Asian countries are expected to accelerate the early retirement of coal-fired power plants. On May 6, Verra, an international carbon credit verification body, announced a new certification methodology that allows emissions reductions from early coal plant shutdowns to be converted into carbon credits.
These credits can be sold to compensate stakeholders for financial losses, injecting new funding momentum into coal phaseout initiatives.
Coal plant losses covered through carbon credits trading
According to Verra’s statement, projects using the “VM0052 Methodology for Accelerating Coal Power Plant Retirement through Just Transition” must be paired with new renewable energy projects. This is to ensure the production of high-quality “Transition Credits” while upholding principles of a just energy transition—supporting workers and communities affected by plant closures with social and economic measures.
The methodology was developed by the Coal to Clean Credit Initiative (CCCI), a program under the Rockefeller Foundation. With Verra’s endorsement, it is expected to boost investor confidence in carbon credits and stimulate broader development of the carbon market.
However, Joseph Curtin, Managing Director for Power and Climate at the Rockefeller Foundation, clarified that the methodology currently applies only to grid-connected coal power plants. It does not cover captive power plants (CPPs)—facilities that supply power exclusively to specific industrial or commercial users without feeding into the national grid.
Verra unveils new methodology allowing companies to earn carbon credits by supporting early coal plant retirements. (Photo: iStock)
Mitsubishi joins transition credit investment
Transition credits have already attracted attention from major companies and governments. HSBC and Standard Chartered began researching related projects last year. The Monetary Authority of Singapore (MAS) is one of the partners of the CCCI, aiming to help Philippine energy giant ACEN retire one of its coal plants 10 years ahead of schedule.
ACEN estimates the early shutdown will cost at least USD 1.5 billion. In addition to support from the Singaporean government, corporate partners include Keppel Corporation and GenZero, a green investment firm. Japan’s Mitsubishi Corporation and its subsidiary Diamond Generating Asia (DGA) recently joined the initiative as well.
Emerging market carbon credit opportunities have also caught the eye of American corporations. On May 6, the Center for Climate and Energy Solutions (C2ES), a U.S.-based think tank, launched the “Kinetic Coalition,” aiming to accelerate corporate investment in clean energy in emerging economies.
Nat Keohane, President of C2ES, said the coalition currently includes 20 potential major buyers of transition credits. Companies such as PepsiCo, Amazon, Mastercard, and McDonald’s are all seeking clean energy solutions within their global value chains.
Source: Verra, Bloomberg, The Straits Times
