A consortium led by the Rockefeller Foundation has launched a pilot initiative to use carbon credits to retire a coal power plant in the Philippines before the end of its natural life, it said on Monday during the COP28 climate talks in Dubai.
The UN talks taking place until December 12 are the latest effort to find a way to wean the world off fossil fuel, but nations are divided over whether to prioritise ways to abate the emissions from the continued burning of coal, oil and gas, or to cease its production as quickly as possible.
In the latest plan to be announced on the sidelines of the summit, the Coal to Clean Credit Initiative (CCCI), supported by Philippine energy company ACEN and the Monetary Authority of Singapore, said it aimed to use carbon credits to decommission the South Luzon Thermal Energy Corporation (SLTEC) plant by as early as 2030, a decade ahead of its current retirement date.
“To retire coal plants, avoid those emissions, and create jobs, we need to create the right incentives for asset owner sand communities and mobilise additional finance,” Foundation President Rajiv Shah said.
CCCI said its project was a “first of its kind” in that it plans to make use of carbon credits to finance the early closure.
On Sunday, the Asian Development Bank said it had reached a conditional deal to decommission an Indonesian power plant nearly seven years earlier than planned as part of its Energy Transition Mechanism (ETM).
CCCI will work with schemes such as the ETM to close plants ahead of schedule using credits from the CO2 cuts generated by the early closure in the Philippines, said Vikram Widge, former head of carbon finance at the World Bank, who is involved in the scheme.
The draft methodology to verify those credits has been submitted for public consultation.
Regulators are seeking tighter scrutiny of carbon credits, which many environmental groups have criticised for allowing the continued use of fossil fuels rather than cutting emissions.
“There shouldn’t be bailouts for this business or for the banks that funded them,” said Gerry Arances, executive director of the Philippines’ Center for Energy, Ecology, and Development.
Many delegates at COP28 say part of the solution would be to establish a global carbon price, which businesses say will help provide planning certainty but has for years proved elusive.
“For carbon flows to pay for the full conversion. it is going to take a substantially higher price of carbon, which I don’t think anybody is ready to pay,” Widge said. “But it can go a substantial way in doing it. It will definitely get it started.”
News of the CCCI complements the Energy Transition Accelerator (ETA), which US climate envoy John Kerry said on Sunday would launch in April.
The ETA, designed by the Rockefeller Foundation and other groups, also aims to accelerate the shift away from coal by using funds from what they say are high-quality carbon credits and could generate more than $200 billion in transition finance by 2035, according to their preliminary estimates.
