Temasek-backed GenZero and Mizuho bank to collaborate on transition credit projects

The new asset class is being tested as an additional avenue for financing the early phase-out of coal plants

Janice Lim
Published Thu, Feb 20, 2025 · 06:48 PM
    • The South Luzon Thermal Energy Corporation’s plant in Batangas, the Philippines, is one of the sites where the transition credits are being piloted.
    • The South Luzon Thermal Energy Corporation’s plant in Batangas, the Philippines, is one of the sites where the transition credits are being piloted. PHOTO: ACEN

    DECARBONISATION-FOCUSED investment company GenZero has signed a memorandum of understanding with Mizuho – one of the three largest banks in Japan – to bring to market a new type of carbon credit, known as transition credits, said the Temasek-backed platform in a press statement on Thursday (Feb 20).

    Transition credits are generated when coal power plants are shut earlier than their original retirement date and replaced with renewable energy sources.

    This new asset class is being tested as an additional avenue for financing the early phase-out of coal plants as a way of making such transactions economically viable since plant owners will lose income when their plants close early.

    These credits are being piloted in two coal plants in the Philippines. One of these plants is the South Luzon Thermal Energy Corporation’s plant in Batangas, which is owned by Acen, the energy arm of Philippine Stock Exchange-listed Ayala Group.

    GenZero said that its partnership with Mizuho aims to generate awareness on how transition credits can support the global transition to clean energy, as well as to eventually pave the way for investments in such projects.

    The agreement will also build on existing efforts between stakeholders in Japan and Singapore for more collaboration.

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    GenZero’s chief executive officer Frederick Teo said that Japan’s technological capabilities, commitment to climate goals, and active participation in regional and international cooperation make it an essential market in advancing Asia’s decarbonisation agenda.

    “GenZero and Mizuho will leverage our collective expertise and regional connections to collaborate on energy transition opportunities, build greater awareness (of) transition credits, and unlock opportunities to support coal-to-clean initiatives,” he added.

    Shinichi Tsunoda, executive officer and general manager of Mizuho’s sustainable business promotion department, said that one of the bigger challenges in transitioning away from coal is over who will bear the transition costs and how it will be done.

    “By ensuring the fair evaluation of decarbonisation initiatives and fair sharing of costs across regions, transition credits open a path for quickly withdrawing from coal-fired power while avoiding economic drawbacks,” he said.

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