Philippine, Singapore companies join hands on project for early coal plant retirement

MANILA - As South-east Asia looks to transition to cleaner energy sources, a Philippines-Singapore partnership is leading the way with the signing of a pact to explore the use of transition credits to accelerate the retirement of a coal-fired power plant.

Philippine conglomerate Ayala Corporation’s energy unit Acen, Temasek-owned investment platform GenZero and Keppel signed a memorandum of understanding on Aug 16 to study using transition credits to decommission such a plant ahead of time.

Transition credits are carbon credits arising from the emissions reduced through retiring a coal plant early and replacing it with cleaner energy sources.

The pilot project involves the South Luzon Thermal Energy coal-fired power plant in Batangas, the Philippines, where the partners are exploring retiring the plant in 2030, 10 years ahead of schedule. This will be done through the use of transition credits, with the old power plant replaced by a clean energy dispatch facility.

When completed, this project is expected to be one of the first converted coal-fired power plants in the world to generate transition credits, said the partners in a joint release on Aug 16.

Singapore’s Minister for Sustainability and the Environment Grace Fu and the Philippines’ Secretary of the Department of Environment and Natural Resources Maria Antonia Yulo-Loyzaga witnessed the signing of the agreement on the sidelines of President Tharman Shanmugaratnam’s three-day state visit to the Philippines.

On Aug 15, Mr Tharman and Philippine President Ferdinand Marcos Jr had

witnessed the signing of a memorandum of understanding that will see Singapore and the Philippines strengthen cooperation on carbon credits.

Under this agreement, both countries will work towards a legally binding implementation agreement for cross-border carbon credit transfers.

Coal-fired power plants are the single largest source of carbon emissions globally, with Asia being the largest coal producer and consumer, led by China and India.

The project will be carried out in collaboration with the Rockefeller Foundation’s Coal to Clean Credits Initiative and the Monetary Authority of Singapore’s Transition Credits Coalition.

The project’s partners, such as GenZero, are optimistic that the South Luzon Thermal Energy pilot project could lay the path for other transition credits projects.

“By demonstrating the successful retirement of coal-fired power plants and transitioning to cleaner energy sources though collaborative public-private sector partnerships across borders, the pilot could pave the way for other plants and countries in the region to follow suit,” said GenZero chief executive Frederick Teo in response to queries from The Straits Times.

“We aim to harness learnings from this pilot and develop a viable commercial model that can catalyse the accelerated retirement of other coal-fired power plants in the region.”