Keppel Corporation (Keppel) BN4 and GenZero have signed a memorandum of understanding (MOU) at the COP28 Singapore Pavilion to jointly pursue opportunities to accelerate the clean energy transition and develop sustainable fuel projects across the Asia Pacific.
Under the MOU, Keppel, through its infrastructure division, and GenZero, a Temasek-owned investment platform company focused on accelerating decarbonisation globally, will carry out feasibility studies to co-develop projects aimed at facilitating the early retirement of coal-fired power plants (CFPPs), as well as Southeast Asia’s pivot to cleaner energy alternatives, such as solar power or geothermal energy.
The announcement comes after the Monetary Authority of Singapore (MAS) launched the Transition Credits Coalition (Traction) and two pilot projects to test the use of “high-integrity transition credits” in transactions for the early retirement of CFPPs. GenZero is a supporting member and knowledge partner of Traction.
According to Keppel and GenZero, the world’s youngest CFPP fleets are located in Southeast Asia and the region relies on coal in its energy mix to meet growing energy demands.
With CFPP power generation being the single largest source of carbon emissions globally, the collaboration comes at a critical juncture as the region navigates rising energy demand and a mounting agenda to phase out coal and meet net-zero targets, say the companies.
However, the successful retirement of CFPPs at scale requires significant financing due to the economic gap between a CFPP’s net present value and its value at the point of retirement.
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As such, the partnership will explore the use of transition credits — a new asset class of carbon credits that can be generated from reductions in emissions when high-emitting assets like CFPPs are retired early and replaced with cleaner energy sources.
The collaboration will draw on GenZero’s climate financing expertise to guide the phase-out and the company’s technical know-how to develop high-integrity carbon credit projects. This will be augmented by Keppel’s expertise in developing technology-based sustainability solutions and its operating capabilities in cleaner energy infrastructure such as renewables and zero- or low-emission combined cycle power plants.
In addition, both parties will explore bioenergy fuel projects in areas such as biomethane, biomethanol and sustainable aviation fuel (SAF) in the Asia Pacific.
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Bioenergy is a form of renewable energy generated from organic materials such as purpose-grown crops and organic wastes that is poised to play a pivotal role in the ongoing energy transition. It offers several advantages to decarbonise hard-to-abate industries such as aviation and the heavy-duty transport sector. Bioenergy fuels are also compatible with existing infrastructure as a drop-in solution.
Cindy Lim, CEO of Keppel’s infrastructure division, says: “Keppel is pleased to work together with GenZero to facilitate the energy transition for hard-to-abate sectors and explore sustainable fuels by leveraging our combined expertise and unique energy transition support mechanisms to scale up the deployment of renewable energy and low-carbon solutions. This collaboration will enable us to continue pushing the envelope to support the adoption of cleaner energy alternatives in the Asia-Pacific region.”
GenZero CEO Frederick Teo adds: “Asia-Pacific accounts for more than half of the global energy consumption. Energy demand will continue to grow alongside economic development. However, truly sustainable economic development will require a transition towards cleaner energy sources. Navigating this transition is difficult. We are delighted to partner Keppel to study the unique challenges confronting the region and invest into practical solutions to address them.”
Keppel notes that the collaboration is not expected to have any material impact on its earnings per share (EPS) and net tangible asset (NTA) per share for the company’s current financial year ending Dec 31.
Shares in Keppel closed 6 cents higher or 0.89% up at $6.81 on Dec 6.
Read more about the early retirement of coal-fired power plants:
- MAS launches coalition, two pilots to test 'transition credits' for early retirement of coal plants (December)
- MAS launches Singapore-Asia Taxonomy, world's first to include 'transition' category (December)
- 'Transition credits' could sweeten deal for early retirement of coal-fired power plants: MAS, McKinsey paper (September)
- MAS panel discusses ways to phase out coal-fired power plants, adopt alternative fuels, attract private financing (September)
- MAS launches public consultations on coal phase-out, voluntary code of conduct for ESG rating agencies (June)
- Retiring coal-fired power plants is the 'mother of all transitions': MAS (June)
- GFANZ APAC Network launches public consultation on proposal to phase out coal-fired power plants (June)
- MAS to launch consultation on qualifying managed phase-out of coal-fired power plants (May)
Follow The Edge Singapore’s coverage of COP28 here.
