November 11, 2025
SINGAPORE – Phasing out about a third of pollutive coal power plants in over a dozen Asian countries through a novel form of carbon credits can reduce emissions by around one billion tonnes annually, an initiative led by Singapore’s central bank has found.
This is equivalent to roughly a third of the European Union’s emissions in 2024.
The figure was highlighted by Singapore’s Ambassador for Climate Action Ravi Menon during the opening of the Singapore Pavilion on Nov 10, the first day of the UN climate change conference COP30 taking place in Brazil.
Transition credits are a new class of carbon credits that Singapore is piloting as a solution to tackling one of the region’s biggest climate problems: its young fleet of coal plants.
Mr Menon had cited such credits as being among a slew of measures the Republic is rolling out for progress to be made on climate action.
“Carbon markets help channel financing to decarbonisation that would otherwise not happen,” he said, adding that Singapore is also looking into blended finance mechanisms – which bring together public, private and philanthropic capital – to increase funding for climate projects.
Representatives from nearly 200 countries have gathered for COP30 in the Amazonian city of Belem to hammer out solutions to slash global carbon emissions, set out pathways to reduce the impacts of climate change, and ramp up efforts to finance climate action.
Coal is the largest source of carbon emissions globally, and in Asia, coal plants contribute to one-third of the region’s emissions.
When a plant is closed early, some planet-warming emissions are prevented from being released. These “savings” can be sold as transition credits to emitters, and the plants can be replaced with renewables. The revenue from the sale of the credits also provides plant owners with a financial incentive to shut the plant down early.
Given that the region has some of the world’s youngest fleets of coal plants, with earlier reports putting the rough age of the region’s coal plants at around 15 years, transition credits are envisioned to be key in accelerating the phase-out of the dirty fossil fuel.
Such facilities often have a lifespan of up to 50 years.
The Monetary Authority of Singapore (MAS) had in 2023 launched the Transition Credits Coalition (Traction), which comprises over 30 entities, including banks, carbon service providers and non-governmental organisations.
The coalition aims to scale up the use of transition credits, and has so far identified two pilot projects in the Philippines – one in South Luzon and the other in Mindanao – where such credits can be used to close the coal plants early.
On Nov 10, MAS released the executive summary of Traction’s final report, which outlines practical solutions and identifies key areas for further action to help scale up the use of transition credits.
The full report, which looked at Asian countries and jurisdictions including Bangladesh, India, Indonesia, South Korea and Taiwan, will be published on Nov 12.
The one billion tonnes of emission reductions from closing a third of the region’s coal plants early were from coal-fired power plants eligible for “high-quality” transition credit projects, said Traction. There are about 2,000 coal plants in Asia, with a majority of them in China.
Such projects must meet a few criteria. For example, to demonstrate the permanence of the emissions reduced, the power plant owner must commit to not building new coal plants, where emissions can persist.
MAS said Asia holds substantial potential for generating transition credits, but its success depends on addressing region-specific needs and ensuring energy access, while making sure that coal plant workers are not left stranded.
For example, Mr Menon previously told the media that the pilot in South Luzon was making good progress, despite challenges that include finding alternative jobs for 200 plant workers.
The Mindanao coal plant’s early retirement, however, is being put on hold because the plant may need to continue operations as hydropower dams undergo maintenance, reported the Philippine Centre for Investigative Journalism in September.
Mr Leong Sing Chiong, the deputy managing director for markets and development at MAS, said: “The case for Asia’s coal-to-clean transition remains compelling, with the potential to strengthen energy access, affordability and reliability for local communities.”
The success of transition credits also hinges on ensuring that people’s access to affordable energy is addressed as coal plants are phased out, noted the six-page summary.
This is because Asia remains a region highly dependent on coal, with limited renewable energy plants and power grid readiness. One way to ensure coal is phased out without cutting off electricity to locals is to shut down boiler units one at a time, preserving grid stability in the transition to renewable plants.
Project methods should specify that a coal plant being closed early is replaced with a renewable energy plant.
In addition, transition credit projects should not sideline livelihoods and communities.
This is fundamental to the credibility, social acceptance and long-term viability of the coal phase-out in Asia, where the sector remains a major source of employment, said Traction.
Proceeds from transition credits can bridge cost gaps, especially where renewable plants and battery storage are more expensive than fossil fuel or coal-based local utility tariffs. The proceeds can also support communities in the long term through re-employment and upskilling. Project developers are also urged to be transparent about how credit revenues will be allocated for the community and renewable energy projects that will replace coal.
Such consideration of community resilience would also enable transition credit schemes to attract a wider array of catalytic and commercial capital, the coalition added. Catalytic capital includes public and philanthropic funds that will support communities in the early stages.
Traction also pointed out that for transition credit projects to apply to a wider range of coal plants, there should be sustained demand for these novel credits and predictable revenues. For instance, to increase firms’ confidence in purchasing transition credits, they can form a “buyers’ coalition” that can help to reduce their risks and send a strong demand signal.
“Energy transition credits can scale when transactions are viable, investable and replicable,” Traction said.
Furthermore, carbon credit insurance is an emerging tool that can strengthen lender confidence and expand capital flows to projects, Traction added. Such insurance coverage is evolving to address risks such as political and regulatory shocks.
With the completion of Traction’s report, the next phase is to translate the findings into concrete coal phase-out projects, said MAS, urging the creation of more pilot projects in the region.
The Traction document on Nov 10 was issued with a statement signed by 21 public and private entities that have committed to support transition credits either by possibly buying and trading them, providing funds for projects, or by building up expertise to enable credible transactions.
These entities include the Asian Development Bank, Grab and Schneider Electric.
“The transition credit initiative aligns with our broader sustainability strategies and long-term climate ambitions. We support mechanisms that demonstrably drive measurable, additional, and permanent emissions reductions, aligned with internationally recognised standards,” said the 21 entities in the statement.
In a televised address at the opening of the Singapore Pavilion at COP30, Minister for Sustainability and the Environment Grace Fu emphasised the importance of collective progress on climate action, and reiterated the Republic’s commitment to finding solutions to the planetary crisis.
“No country will be able to insulate itself if temperature continues to rise. All of us, should affirm our commitment to multilateralism and the Paris Agreement… Each year of delayed action makes it harder and more costly to transform and adapt,” she added.
Additional reporting by Ang Qing