By David Stanway and Valerie Volcovici
DUBAI (Reuters) – A consortium led by the Rockefeller Foundation has launched a pilot initiative to use carbon credits to retire a coal-fired power plant in the Philippines before the end of its natural life, it said on Monday at the COP28 climate talks in Dubai.
The UN negotiations taking place until December 12 are the latest attempt to find a way to wean the world off fossil fuels, but countries are divided over whether to prioritize ways to to reduce emissions from the continued burning of coal, oil and gas, or to stop 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), backed by Philippine energy company ACEN and the Monetary Authority of Singapore, says it aims to use carbon credits to to dismantle Luzon Thermal. The Energy Corporation (SLTEC) power plant is scheduled to be completed as early as 2030, ten years before the current retirement date.
“To retire coal-fired power plants, avoid those emissions and create jobs, we must create the right incentives for asset owners and communities and mobilize additional financing,” said Rajiv Shah, president of the Foundation.
CCCI said its project was a “first of its kind” in that it plans to use carbon credits to finance the early closure.
On Sunday, the Asian Development Bank said it had reached a conditional agreement to decommission an Indonesian power plant almost seven years ahead of schedule as part of its Energy Transition Mechanism (ETM).
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CCCI will work with programs like the ETM to close factories ahead of schedule, using credits from the carbon savings generated by the early shutdown in the Philippines, said Vikram Widge, former head of carbon finance at the World Bank, who joined the plan is involved. .
The draft methodology to verify these credits has been submitted for public consultation.
Regulators are seeking stricter oversight of carbon credits, which are criticized by many environmental groups for allowing the continued use of fossil fuels instead of cutting emissions.
“There should be no bailouts for this company or the banks that financed it,” said Gerry Arances, executive director of the Philippine Center for Energy, Ecology and Development.
Many delegates at COP28 say part of the solution would be setting a global carbon price, which the business community says will help provide planning certainty but has proven elusive for years.
“To make carbon flows pay for the full conversion… there will be a significantly higher carbon price required, which I don’t think anyone is willing to pay,” Widge said. “But it can make a substantial contribution. It will certainly get started.”
News of the CCCI complements the Energy Transition Accelerator (ETA), which US Climate Representative John Kerry said on Sunday will be launched in April.
The ETA, designed by the Rockefeller Foundation and other groups, also aims to accelerate the shift away from coal by using resources from what they say are high-value carbon credits, and could generate more than $200 billion in transition financing by 2035, according to their preliminary estimates.
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(This story has been refiled to remove unnecessary bullet points)
