Mitsubishi Corporation and Diamond Generating Asia (DGA) have joined forces with ACEN, GenZero, and Keppel to accelerate the early retirement of a 246-megawatt coal-fired power plant in the Philippines, marking a major step in using Transition Credits to fund clean energy replacement.
The partnership, formalized through a Deed of Accession to a 2024 Memorandum of Understanding (MOU), aims to retire the South Luzon Thermal Energy Corporation (SLTEC) plant by 2030—ten years ahead of its planned 2040 shutdown.
The coalition expands on ACEN’s groundbreaking 2022 transaction, which pioneered the world’s first market-based Energy Transition Mechanism by cutting the SLTEC plant’s lifespan in half.
“Transition Credits offer a groundbreaking solution by mobilizing capital to accelerate the early retirement of coal-fired power plants while replacing the capacity with affordable clean energy and ensuring a just transition for surrounding local communities and industries,” said Frederick Teo, CEO of GenZero.
Teo’s firm, a decarbonization investment platform backed by Singapore’s Temasek, is helping to structure the credits that will finance the replacement of coal power with renewables.
Shinichiro Suzuki, CEO of DGA, said their participation aligns with the company’s long-term climate goals and supports policy dialogues between Japan and the Philippines on carbon markets.
“We are honored to join this landmark initiative with ACEN, GenZero, and Keppel, which represents one of the world’s first steps toward realizing a credible and a scalable Transition Credits scheme,” Suzuki said.
“What makes this project truly unique is not only the early retirement of a coal-fired power plant, but also its replacement with equivalent generation of new renewable energy,” he added.
The SLTEC plant, a joint venture between ACEN and other Ayala-led firms, had originally been slated to operate until 2040, the average 40-year life of most coal assets.
ACEN’s new target of 2030 would reduce carbon emissions more rapidly while ensuring affected communities and workers are supported through a just transition framework.
The initial MOU was signed in 2024 and witnessed by high-level officials including Singapore’s Minister for Sustainability and the Environment, Grace Fu, and Philippine Environment Secretary Maria Antonia Yulo Loyzaga.
Keppel’s involvement is set to enhance the coalition’s ability to tap both voluntary and emerging compliance carbon markets for monetizing the transition credits.
“Keppel is pleased to welcome Mitsubishi and DGA, whose involvement opens up further opportunities for the offtake of transition credits in targeted voluntary and emerging compliance markets,” said Cindy Lim, CEO of Keppel’s Infrastructure Division.
ACEN CEO Eric Francia said the broader partnership is “a milestone in our collective efforts to address the enormous challenges of the energy transition.”
“We hope this will serve as a catalyst for other coal plant owners to embark on their clean energy journey,” Francia added.
Mitsubishi and DGA have previously worked with ACEN on renewable energy ventures, including wind farms in Ilocos Norte, strengthening their ties with ACEN’s parent firm, Ayala Corporation.
The Philippines remains heavily reliant on coal, which accounted for over 43% of the country’s energy mix in 2023, according to the Department of Energy.
If successful, the initiative could serve as a replicable model for developing countries seeking to accelerate coal phaseouts without compromising energy supply or economic development.
It also aligns with global momentum toward carbon pricing and just transition funding mechanisms, particularly in Southeast Asia, where energy demand continues to grow.
