|
Listen to this story:
|
- Accelerating Coal Phase-Out: Mizuho and GenZero introduce transition credits to incentivize early coal plant retirements and boost clean energy adoption.
- Financing the Transition: Transition credits offer a market-based solution to cover coal plant closure costs and fund renewable energy projects.
- Private Sector’s Role: The partnership highlights how private capital can drive decarbonization and support Asia’s energy transition.
Mizuho Bank and Temasek-owned GenZero announced a partnership to develop transition credits, a financial tool designed to support the early retirement of coal-fired power plants and accelerate the shift to clean energy in Asia.
The Problem:
Coal remains the largest source of energy-related CO2 emissions, contributing 45% of global fuel combustion emissions in 2022, according to the International Energy Agency (IEA). The IEA estimates that nearly $10 trillion will be needed by 2050 to transition away from coal-powered electricity.
How It Works:
Transition credits quantify the CO2 emissions prevented by shutting down coal plants early. These credits can be traded in carbon markets, providing plant operators with financial incentives to retire facilities and invest in cleaner power sources.
Shinichi Tsunoda, Mizuho Bank’s Sustainable Business Promotion Department General Manager, emphasized:
“Transitioning away from coal-fired power, which is currently a core source of power, is critical to decarbonization in Asia… Transition credits open a path for quickly withdrawing from coal-fired power while avoiding economic drawbacks.”
Broader Impact:
The partnership aligns with Traction, the Monetary Authority of Singapore’s transition credit initiative, which includes pilot projects in the Philippines. These projects demonstrate how early plant closures, such as the planned South Luzon coal plant retirement in 2030, can prevent up to 19 million tonnes of emissions.
Frederick Teo, CEO of GenZero, added:
“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.”
The Bigger Picture:
This move contributes to global climate finance efforts, which aim to mobilize $1.3 trillion annually by 2035 to help developing nations limit climate impacts. The private sector’s involvement is crucial, with innovative financing mechanisms like transition credits providing practical solutions to accelerate decarbonization.
Rueban Manokara, of the World Wide Fund for Nature, highlighted:
“The private sector is best placed to drive the clean energy transition by structuring and offering financing mechanisms to incentivize accelerated coal phase-outs.”
What’s Next:
Mizuho will focus on raising awareness of transition credits within Japan and explore debt financing options for transition projects globally. GenZero will continue its partnerships in the region to expand the adoption of this innovative approach to energy transition.
This strategic partnership demonstrates how private sector innovation can bridge the climate finance gap and support a sustainable, coal-free future for Asia and beyond.
Follow ESG News on LinkedIn