Mitsubishi Corporation and its subsidiary, Diamond Generating Asia (DGA), have joined Acen, GenZero and Keppel in exploring a potential collaboration to retire a 246-megawatt (MW) coal-fired power plant in the Philippines and replace its generation output with clean and reliable energy.
According to a May 7 announcement, Mitsubishi and DGA have formally entered the collaboration by signing a deed of accession to a memorandum of understanding (MOU) established in August 2024 between Acen, GenZero and Keppel.
Acen, the listed energy company of the Philippines’ Ayala Group, implemented the world’s first market-based Energy Transition Mechanism and reached financial close in November 2022. The transaction involved the divestment of the 246MW South Luzon Thermal Energy Corporation (SLTEC) coal plant, with a commitment to retire it by 2040 — halving its typical technical life of 50 years — and transitioning to renewable energy technology.
Acen now seeks to accelerate SLTEC’s retirement target to 2030. Transition credits will play a crucial role in ensuring a just transition by making replacement power affordable and supporting affected workers and the local community.
Transition credits are high-integrity carbon credits granted to projects that enable the early retirement of coal plants and their replacement with clean energy. The Monetary Authority of Singapore (MAS) mooted the concept in 2023 as a “complementary financing instrument” that could incentivise plant owners to retire their assets early and replace them with renewable energy.
Mitsubishi and DGA’s participation enhances access to the Japanese market, which could support the emissions trading scheme in Japan. The parties to the MOU say the transition credits initiative is designed to be implemented under Article 6 of the Paris Agreement with corresponding adjustments.
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Shinichiro Suzuki, CEO of DGA, says: “What makes this project truly unique is not only the early retirement of a coal-fired power plant, but also its replacement with equivalent generation of new renewable energy — enhancing both the scale of clean energy deployment and the integrity of the carbon credits generated.”
From left: Jonathan Back, group CFO and group chief strategy officer, Acen; Frederick Teo, CEO of GenZero; Eric Francia CEO of Acen; Cindy Lim, CEO of Keppel’s infrastructure division; Shinichiro Suzuki, CEO of DGA; Tatsuki Matsuda, deputy general manager of the Asia and Oceania power business department of Mitsubishi Corporation
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Carbon crediting methodology
The SLTEC is one of two pilot projects launched by MAS in 2023; the other pilot is a collaboration with the Asian Development Bank (ADB), which is advising the Government of Philippines on the retirement of a coal plant in Mindanao.
Ahead of the early closure of the SLTEC, Acen has been working with MAS and The Rockefeller Foundation to develop a methodology that calculates the avoided emissions while ensuring social and economic safeguards for communities involved in the plant.
The methodology was developed under the Coal to Clean Credit Initiative (CCCI) — supported by The Rockefeller Foundation — with feasibility assessments and stakeholder consultations by global carbon asset developer South Pole.
On May 6, Verra CEO Mandy Rambharos announced the certifier’s approval of the CCCI methodology under its Verified Carbon Standard (VCS) Programme.
This sets a new benchmark for accurately quantifying emissions reductions from the early decommissioning of coal-fired power plants. It also embeds just transition safeguards, requiring each project to design and implement comprehensive plans to mitigate socio-economic impact on workers and communities. These plans must outline pathways to new employment, reskilling and local economic development.
If successful, this pilot project could be replicated and scaled globally — catalysing similar initiatives and accelerating the global shift from coal to renewable energy.
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Eric Francia, CEO of Acen, says the partnership represents a milestone in addressing the “enormous challenges” of the energy transition. “By pioneering the transition credits mechanism, we are not only accelerating decarbonisation but also demonstrating a viable pathway for coal-dependent economies to transition sustainably. We hope this will serve as a catalyst for other coal plant owners to embark on their clean energy journey.”
Photo: GenZero
Read more about the early retirement of coal-fired power plants:
- Trump says he’s authorising administration to produce coal power (March)
- JPMorgan pursues deals to finance shutdown of coal-fired power (November 2024)
- Indonesia’s ‘ambitious’ net zero, coal phase-out plans ‘challenging’ in reality: BMI (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)
- Keppel and GenZero sign MOU to accelerate Southeast Asia's clean energy transition (December 2023)
- 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)
