A Financial Solution for a Cleaner Future

Mizuho Bank and Temasek-owned GenZero have announced a strategic partnership to develop transition credits—an innovative financial tool aimed at accelerating the early retirement of coal-fired power plants in Asia. This initiative supports the shift to clean energy while ensuring financial viability for plant operators.

The Urgent Need for Coal Transition

Coal remains the world’s largest source of energy-related CO₂ emissions, accounting for 45% of global fuel combustion emissions in 2022, according to the International Energy Agency (IEA). The IEA estimates that nearly $10 trillion will be needed by 2050 to phase out coal power and transition to cleaner energy sources.

How Transition Credits Work

Transition credits measure the CO₂ emissions prevented by retiring coal plants early. These credits can be traded in carbon markets, providing financial incentives for operators to shut down facilities and invest in renewable energy.

Shinichi Tsunoda, General Manager of Mizuho Bank’s Sustainable Business Promotion Department, highlighted the importance of this mechanism, stating, “Transitioning away from coal-fired power, which is currently a core source of power, is critical to decarbonization in Asia… Transition credits open a path for quickly withdrawing from coal-fired power while avoiding economic drawbacks.”

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Driving Regional Decarbonization

The partnership aligns with Traction, the Monetary Authority of Singapore’s transition credit initiative, which includes pilot projects in the Philippines. A key example is the planned early retirement of the South Luzon coal plant by 2030, expected to prevent up to 19 million tonnes of CO₂ emissions.

Frederick Teo, CEO of GenZero, emphasized the partnership’s impact, stating, “GenZero and Mizuho will leverage our collective expertise and regional connections to collaborate on energy transition opportunities, build greater awareness for transition credits, and unlock opportunities to support coal-to-clean initiatives.”

The Role of Climate Finance

This initiative is part of a broader global effort to mobilize $1.3 trillion annually by 2035 for climate finance in developing nations. The private sector plays a critical role in structuring financial mechanisms to drive the clean energy transition.

Rueban Manokara from the World Wide Fund for Nature noted, “The private sector is best placed to drive the clean energy transition by structuring and offering financing mechanisms to incentivize accelerated coal phase-outs.”

What’s Next?

Mizuho plans to raise awareness of transition credits within Japan and explore debt financing options for energy transition projects worldwide. GenZero will continue to expand partnerships to drive broader adoption of this approach.

This collaboration highlights how financial innovation can bridge the climate finance gap, enabling a sustainable, coal-free future for Asia and beyond.

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