Singapore, 6 May, 2025 – A major breakthrough in carbon markets and climate finance was unveiled today at the Ecosperity conference with the launch of the first-ever carbon crediting methodology designed to enable the early retirement of coal power plants and their replacement with renewable energy.

The methodology was developed under the Coal to Clean Credit Initiative (CCCI) – an initiative supported by The Rockefeller Foundation – with end-to-end technical leadership from global carbon asset developer South Pole, as well as technical expertise and stakeholder convening by the Climate Policy Initiative (CPI) and the Rocky Mountain Institute (RMI). It offers a high-integrity, market-based pathway to accelerating the global energy transition through transition credits.

Approved by Verra, one of the world’s leading carbon standards organisations, the methodology is the product of a rigorous, multi-year, and multi-stakeholder development process. It sets a new benchmark for accurately quantifying emissions reductions from the early decommissioning of coal power plants. Uniquely, it also embeds just transition safeguards, requiring each project to design and implement comprehensive plans to mitigate socio-economic impacts on workers and communities. These plans must outline pathways to new employment, reskilling, and local economic development.

In a first for the carbon market, the methodology applies the same stringent monitoring, reporting, and verification (MRV) standards to the execution of these just transition plans as it does to the emissions reductions themselves—ensuring both environmental and social integrity.

South Pole supported the end-to-end technical process for CCCI – from initial feasibility assessments and stakeholder consultations to drafting the methodology in line with stringent requirements from Verra and the CCCI. This helped lay the groundwork for a scalable approach to harnessing the power of carbon markets for the coal-to-clean energy transition.

“This methodology is not just a carbon accounting tool – it’s a blueprint for responsibly phasing out coal while unlocking finance for clean energy,” said Frédéric Gagnon-Lebrun, Global Senior Director, Policy & Strategy, at South Pole. “By aligning with national climate targets and ensuring environmental and social integrity, we’re demonstrating how carbon markets can support a just and accelerated energy transition.”

“More and more countries and communities are choosing to transition to clean energy sources, because the economics work for them and provide additional health, economic, and security benefits. This week, we were proud to stand alongside our partners in bringing this methodology to market,” said Dr. Joseph Curtin, Managing Director for Power and Climate at The Rockefeller Foundation. “The next step is to demonstrate how high-integrity transition credits can unlock tangible benefits for people living and working near coal facilities.”

“To meet global climate goals, we need to do more than slow emissions—we need to rethink the very systems that produce them. Our new methodology empowers energy providers to make that shift in a way that doesn’t leave workers or communities behind and doesn’t inadvertently exacerbate energy poverty,” said Mandy Rambharos, CEO of Verra. “With this launch, Verra is raising the bar for how carbon finance can drive real climate action while putting people and equity at the center of the energy transition.”

“We laud the successful launch of the methodology, a first for coal to clean transitions. This is a critical step to enable initiatives such as ACEN’s transition credits pilot project, which will involve the accelerated and just transition of a 246MW coal plant in the Philippines, and its replacement with clean, reliable and affordable energy,” said Eric Francia, CEO of ACEN.

Coal remains the single largest source of global power emissions, yet more than 90% of plants are locked in by long-term contracts or regulations that guarantee returns — leaving little incentive for early retirement. The new methodology enables a new source of finance to support the energy transition, through the monetisation of avoided emissions from retiring these assets before their planned or expected end-of-life and their replacement by new renewable energy capacity.

Serving as a proof of concept, the CCCI urges carbon market participants, governments, and financiers to leverage this new tool – and to recognise its potential to support the achievement of the Paris Agreement goals and Nationally Determined Contributions (NDCs), and to drive a high-integrity transition from coal to clean energy that benefits local communities and economies.

Looking ahead, South Pole is focused on supporting the integration of transition credits into both voluntary and compliance markets, unlocking finance for a just, accelerated transition to renewables.

Frédéric Gagnon-Lebrun added: “The CCCi has shown that it’s possible to apply the highest standards of environmental integrity to some of the hardest-to-abate sectors. For the carbon market to significantly contribute to shutting down coal plants, demand for transition credits must scale.”

Source: South Pole