ACEN, GenZero, Keppel ink deal for coal phaseout

MANILA, Philippines — Ayala Group’s listed energy company ACEN, investment firm GenZero and infrastructure company Keppel Ltd. have signed an agreement exploring the use of transition credits to accelerate the retirement of South Luzon Thermal Energy Corp. (SLTEC)’s coal-fired power plant (CFPP) in Batangas and replace it with a clean energy dispatch facility.

Under the agreement, parties will undertake a development study to explore the origination and sale of transition credits to accelerate the decommissioning of the 246-megawatt SLTEC power station in Calaca, Batangas by 2030.

After its early retirement, the 246-MW baseload of the CFPP will be replaced with a mid-merit integrated renewables and energy storage system consisting of a solar plant and battery storage.

The project will explore the development of end-to-end technological solutions and an economic model of the coal-to-clean transition.

Upon completion, the project is expected to be one of the first converted CFPPs worldwide to generate transition credits.

The project will be carried out in collaboration with the Rockefeller Foundation’s Coal to Clean Credit Initiative and the Monetary Authority of Singapore’s Transition Credits Coalition.

CFPPs are the single largest source of carbon emissions globally.

Southeast Asia is home to the fourth largest CFPP fleet in the world, which is also among the youngest with an average age of less than 15 years.

The early retirement of CFPPs is a critical step toward achieving the Paris Agreement goals and global net zero targets by 2050. 

At the 2023 UN Climate Change Conference, the Singapore government said it is prepared to offtake transition credits if it meets Singapore’s standards for high environmental integrity. 

The joint agreement of ACEN, GenZero and Keppel could come under Article 6 of the Paris Agreement collaboration between the Philippines and Singapore, wherein countries can transfer carbon credits earned from reducing greenhouse gas emissions to help one or more countries meet their climate target.

Signatories to the agreement are ACEN president Eric Francia, ACEN chairman Cezar Consing, GenZero chief executive officer Frederick Teo and Keppel’s Infrastructure Division chief executive officer Cindy Lim.

Present at the signing ceremony were Singapore’s Minister for Sustainability and the Environment Grace Fu, Environment Secretary Maria Antonia Yulo-Loyzaga, Ayala Corp. chairman and Temasek board director Jaime Augusto Zobel de Ayala, Ayala Corp. board director Fernando Zobel de Ayala and ACEN board director Jaime Alfonso Zobel de Ayala.

Keppel is delighted to collaborate with ACEN and GenZero in exploring the novel use of high-quality transition credits as a catalyst for the clean energy transition, especially in the hard-to-abate power generation sector.

- Cindy Lim, Chief Executive Officer, Keppel’s Infrastructure Division

Cross-border collaboration is critical to achieve a just energy transition in Southeast Asia and help our economies achieve our decarbonization objectives. Transition credits can help crowd in catalytic financing for such coal-to-clean energy initiatives.

- Frederick Teo, Chief Executive Officer, GenZero

Partnership is an integral part of Ayala’s strategy and culture. We look forward to this potential partnership among regional champions in energy transition.

- Cezar Consing, ACEN Chairman 

The Philippines is at the forefront of energy transition initiatives, and this collaboration potentially unlocks further opportunities in the country. We also believe that this model can scale across the region, and even globally.

- Eric Francia, ACEN President 

This article first appeared on The Philippine Star website on 19 August 2024.