Asia's Carbon Markets Strategic Imperatives for Corporations 2025

Title of box one goes here, try to keep less than 85 characters in lengthToday, around 15% of global greenhouse gas emissions stem from Asia’s coal-fired power plants (CFPPs). However, Asia’s energy transition is a complex challenge that needs to balance energy security, economic growth and decarbonization. Despite the falling costs of renewable energy, there remain substantial barriers to phase out coal in the region. These include renewables intermittency, grid constraints, CFPP sunk costs, long-term power purchase agreements (PPAs) and coal-dependent socioeconomic structures. Phasing out CFPPs early requires addressing the economic gap from foregone cashflows. Blended finance can help by lowering costs with cheaper capital, but the loan tenor must be sufficiently long and the cost of borrowing sufficiently low to meaningfully accelerate coal phase-out. However, to reach net zero by 2050, the IEA calls for unabated coal generation to decline rapidly, falling 50% by 2030. Transition credits can complement blended finance to enable Paris- aligned coal transitions. Transition credits are a proposed new category of carbon credits that aim to monetize the emissions avoided through early closures of CFPPs and their replacement with clean energy. They address three gaps: economic (compensating equity, debt and PPA holders), energy (replacing lost CFPP output with renewables) and social (supporting just transitions for local communities). They come with robust environmental and social safeguards such as additionality tests, permanent decommissioning, clean energy replacement and just transition plans. In May 2025, Verra approved the first transition credit methodology by the Coal-to-Clean Credit Initiative (CCCI), led by the Rockefeller Foundation and supported by South Pole. To demonstrate the potential of transition credits, GenZero is partnering ACEN, Keppel, Mitsubishi and Mitsubishi subsidiary Diamond Generating Asia on a pilot project to accelerate the retirement of the 246 MW South Luzon Thermal Energy Corporation (SLTEC) CFPP from 2040 to 2030 and replace it with clean energy. ACEN had already executed a refinancing deal to shut SLTEC after 25 years in 2040 instead of its technical life of up to 50 years. The project now explores transition credits to further accelerate this to 2030, reducing an additional 19 million tonnes of carbon emissions while ensuring a just transition. GenZero sees transition credits as an innovative solution to catalyse system-level transformation in the energy sector, accelerating the shift from coal to clean energy while ensuring a just transition for local communities. By directly addressing the barriers that hinder the coal transition, transition credits help Asia to close the gap to Paris-aligned decarbonization pathways. CASE STUDY 12 GenZero – leveraging carbon credits to accelerate the coal-to-clean transition Source: expert interview with GenZero. Asia’s Carbon Markets: Strategic Imperatives for Corporations 44 Transition credits lever — additional r evenues fr om carbon cr edit salesMethodology development, verification and issuance of cr edits Transition credits platformCash pur chasesCredit pur chase, retirement Transition credit offtakers Carbon standardsBlended finance lever — lower costs from cheaper capital Lower cost of capitalLower risk to cr owd in financingLower inter est rates, patient capital, cr edit support Commer cial capital Commitment to early r etirement Carbon cr edit revenuesCommitment to early r etirementCoal-fired power plant asset ownersBlended finance platform Commercial lenders, private investorsConcessional lenders,impact investors, grants