Mizuho Bank has entered into a memorandum of understanding (MOU) with Temasek's decarbonisation-focused investment subsidiary GenZero to partner on the development of transition credits to accelerate the early retirement of coal-fired power plants (CFPPs).
CFPPs are the single largest source of carbon emissions globally. “Transition credits play a vital role in accelerating the early retirement of CFPPs and their transition towards cleaner energy sources,” reads a Feb 20 joint press release.
Transition credits can be generated based on the emissions reductions achieved by retiring a coal plant early. These credits can consequently be sold in carbon markets to generate an additional financial stream for plant operators and cover the costs associated with early retirement and securing alternative cleaner power sources.
This strategic partnership aims to pave the way for investments into transition credit projects and generate greater awareness on the importance of transition credits in facilitating the clean energy transition globally.
Mizuho Bank and GenZero will also build on existing efforts to further collaboration between key stakeholders in Japan and Singapore to progress the transition credits agenda.
Frederick Teo, CEO of GenZero, says: “As a major global economy, Japan’s technological capabilities, commitment to climate goals and active participation in regional and international cooperation makes it an essential market in advancing Asia's decarbonisation agenda. GenZero and Mizuho will leverage our collective expertise and regional connections to collaborate on energy transition opportunities, build greater awareness for transition credits and unlock opportunities to support coal-to-clean initiatives.”
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Shinichi Tsunoda, executive officer and general manager of the sustainable business promotion department at Mizuho Bank, says: “Transitioning away from coal-fired power, which is currently a core source of power, is critical to decarbonisation in Asia. One of the bigger challenges is the question of who will bear the transition costs and how they will do so. By ensuring fair evaluation of decarbonisation initiatives and fair sharing of costs across regions, transition credits open a path for quickly withdrawing from coal-fired power while avoiding economic drawbacks.”
Tsunoda adds: “GenZero is a leader in this field, being a frontrunner driving transition credits efforts. Therefore, entering into this partnership to expand adoption of transition credits with GenZero is a significant step for Mizuho. Going forward, we will work together to positively contribute to a just transition in Asia.”
In August 2024, GenZero signed an MOU with Keppel and Acen, the listed energy company of the Philippines’ Ayala Group, to accelerate the decommissioning of the 246-megawatt South Luzon Thermal Energy Corporation (SLTEC) in Calaca, Batangas.
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This would shorten the lifespan of the plant by a decade to 2030. When completed, the project is expected to be one of the first converted CFPPs in the world to generate transition credits, a concept mooted by the Monetary Authority of Singapore (MAS) in 2023.
The SLTEC is one of two pilot projects launched by MAS last year. Acen fully divested from 246-megawatt (MW) SLTEC in 2022 and is coordinating the early closure of SLTEC with plant owners.
Along with the pilot projects, MAS launched in December 2023 the Transition Credits Coalition (Traction), supported by close to 30 members and knowledge partners, including Temasek, GenZero, Citi, Standard Chartered, DBS and Oversea-Chinese Banking Corporation (OCBC).
It will study the challenges and propose solutions to scale the early retirement of CFPPs in Asia through “high-integrity carbon credits”, says MAS.
Read more about the early retirement of coal-fired power plants:
- JPMorgan pursues deals to finance shutdown of coal-fired power (November 2024)
- Keppel, GenZero, Acen sign MOU to study, pioneer use of transition credits to retire coal plant in the Philippines (August 2024)
- Sembcorp CEO, DBS energy head deliver reality checks on renewables (June 2024)
- HSBC-funded whitepaper proposes ‘repowering’ coal plants to support renewables (June 2024)
- One of MAS’s two coal plant retirement pilots provides first update since COP28 (April 2024)
- MAS launches coalition, two pilots to test 'transition credits' for early retirement of coal plants (December 2023)
- MAS launches Singapore-Asia Taxonomy, world's first to include 'transition' category (December 2023)
- 'Transition credits' could sweeten deal for early retirement of coal-fired power plants: MAS, McKinsey paper (September 2023)
- MAS panel discusses ways to phase out coal-fired power plants, adopt alternative fuels, attract private financing (September 2023)
- MAS launches public consultations on coal phase-out, voluntary code of conduct for ESG rating agencies (June 2023)
- Retiring coal-fired power plants is the 'mother of all transitions': MAS (June 2023)
- GFANZ APAC Network launches public consultation on proposal to phase out coal-fired power plants (June 2023)
- MAS to launch consultation on qualifying managed phase-out of coal-fired power plants (May 2023)
