By Ashley Erika O. Jose, Reporter
AYALA-CONTROLLED ACEN Corp. said the Philippine agreement with Singapore to collaborate on carbon credits are a pathway towards accelerating climate action.
“(Transition credits are) progressing nicely. The recent development here is the MoU (memorandum of understanding) between the Philippines and Singapore,” ACEN President and Chief Executive Officer Eric T. Francia told reporters recently.
The Philippines and Singapore signed in August a memorandum of understanding to collaborate on carbon credits in line with Article 6 of the Paris Agreement.
The MoU signifies the two countries’ intent to collaborate to attain their sustainability targets, exchange best practices, and explore the development of high-integrity carbon markets.
“The next step is to have that implementation agreement. The Philippine government needs to set up its carbon framework and policies,” Mr. Francia said.
The Paris Agreement binds its signatories to take action in arresting the warming of global temperatures to well below 2°C compared to pre-industrial levels. Signatories have committed to action plans keeping warming at 1.5°C.
ACEN, the energy arm of the Ayala Group, has said that transition credits can help in the early retirement of coal-fired power plants in favor of renewable energy.
Transition credits are a complementary financing mechanism that ensure a just energy transition by leveraging carbon finance to replace fossil-fuel sources with clean energy.
Mr. Francia said the Philippines does not need a carbon tax to achieve its climate goals.
“We need to have the proper registry and accounting system. We do not need a carbon tax to establish that system. People might equate setting up a carbon policy and a framework and a registry with carbon tax which can be quite controversial,” he said.
Singapore’s carbon tax allows companies to use international carbon credits to offset their carbon emissions.
“Singapore has a carbon tax regime. The good thing about Singapore is they open the purchase of international carbon credits. That is what we are planning to tap as a source of demand for these transition credits,” Mr. Francia said, noting that a government-to-government agreement will be needed to qualify their credits to Singapore’s carbon taxpayers.
“That’s why we need that government-to-government or article six agreement, so that our credits will qualify as marketable to the Singapore carbon taxpayers… That’s what we need so we could be suppliers of high-end energy carbon credits,” he said.
ACEN has recently partnered with The Coal to Clean Credit Initiative to use carbon finance to retire its coal power plant.
The energy company is exploring the use of transition credits to accelerate the retirement of the 246-megawatt South Luzon Thermal Energy Corp. coal-fired power plant as early as 2030.
This initiative is in line with ACEN’s ambition of 20 gigawatts of renewable energy by 2030 and the complete shift of its power generation portfolio to 100% renewable energy by 2025.