Three companies have signed a Memorandum of Understanding (MOU) to jointly explore the creation and use of Transition Credits (TCs) to expedite the decommissioning of the South Luzon Thermal Energy Corporation (SLTEC) coal-fired power plant (CFPP) in Batangas, Philippines. The CFPP will be replaced by a clean energy dispatch facility. Once completed, this project is anticipated to become one of the first converted CFPPs globally to generate TCs, marking a significant step in the partners' shared commitment to advancing a fair and efficient transition to clean energy in Southeast Asia.
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, such as SLTEC, is therefore a critical step for the region towards achieving the Paris Agreement goals and global net zero targets by 2050.
Under the MOU, the parties will jointly undertake a development study to explore utilizing TCs to facilitate the project’s implementation and achievement of the early retirement goal. The origination and sale of TCs will help to accelerate the decommissioning of the 246 MW SLTEC CFPP located in Calaca, Batangas by 10 years (i.e. 2030), and also support just transition initiatives.
Guests of Honour, Ms. Grace Fu, Singapore’s Minister for Sustainability and the Environment, and Ms. Maria Antonia Yulo-Loyzaga, Secretary of the Department of Environment and Natural Resources of the Philippines, were present to witness the signing of the MOU. The agreement was signed by Ms. Cindy Lim, CEO of Keppel’s Infrastructure Division; Mr. Frederick Teo, CEO of GenZero; Mr. Cezar Consing, Chairman of ACEN; and Mr. Eric Francia, President and CEO of ACEN. Also attending the signing ceremony were Mr. Jaime Augusto Zobel de Ayala, Chairman of Ayala Corporation and Board Director of Temasek; Mr. Fernando Zobel de Ayala, Board Director of Ayala Corporation; and Mr. Jaime Alfonso Zobel de Ayala, Board Director of ACEN.
The project will also investigate the creation of comprehensive technological solutions and an economic model for transitioning from coal to clean energy. This transition aims to replace the 246 MW baseload of the CFPP with a mid-merit Integrated Renewables and Energy Storage System (IRESS), which will include a solar plant and battery storage. In decommissioning the SLTEC CFPP, the partners will consider environmental, social, and governance factors, adhering to best practices.
The project will be conducted in partnership with the Rockefeller Foundation’s Coal to Clean Credit Initiative (CCCI) and the Monetary Authority of Singapore’s (MAS) Transition Credits Coalition (TRACTION). It may also align with Article 6 of the Paris Agreement, which facilitates collaboration between the Philippines and Singapore. Article 6 allows countries to transfer carbon credits earned through greenhouse gas emission reductions to assist other countries in achieving their climate targets.