First carbon credit scheme for early coal plant closures unveiled

A new rulebook has been introduced by the carbon registry Verra to create carbon credits by phasing out coal power plants early and replacing them with cleaner energy sources. Projects using this methodology will aim to monetize emissions avoided through early plant retirements. The sale of offsets will provide financial compensation to coal plant owners for revenue lost by not operating the plants. The US-based philanthropy Rockefeller Foundation, which spearheaded the rulebook’s development, aims to enroll 60 coal power plants in the program by 2030.

Joseph Curtin, managing director for power and climate at The Rockefeller Foundation, highlighted the potential benefits of these credits in aiding communities’ transition to clean and affordable energy. However, some climate experts have expressed concerns about using carbon markets to fund the coal transition and the integrity of the generated carbon credits.

The methodology allows project developers to replace some, not all, of the retired coal power capacity and offers flexibility in switching to biomass. While the scheme’s supporters emphasize the projects’ safeguards for affected individuals, critics warn about the environmental impact of biomass and uncertainties in predicting future emissions accurately.

Funding for the transition away from coal will not come from the carbon market but from other sources such as governments, philanthropies, or banks. The initiative aims to phase out coal power globally by 2040, aligning with the Paris Agreement’s goal of limiting global warming. Despite challenges in implementing transition programs, efforts are ongoing to accelerate the shift towards cleaner energy sources, with a focus on ensuring renewables directly replace lost coal capacity to maintain integrity and effectiveness.