The Monetary Authority of Singapore (MAS) is advancing efforts to make energy transition credits a credible financing tool for Asia’s decarbonisation, following insights from the TRACTION coalition’s final report.
MAS formed the Transition Credits Coalition (TRACTION) at COP28 to explore how carbon credits from the early retirement of coal-fired power plants can support a managed and equitable shift to clean energy.
The coalition brings together over 30 partners from carbon services, project development, energy financing, risk management and non-governmental organisations.
The report estimates that about 33 per cent of operating and developing coal plants across 15 Asian markets could generate energy transition credits, representing roughly 1 gigatonne of potential annual emissions reductions.
Success depends on region-specific strategies that maintain energy reliability and affordability, backed by predictable carbon revenues, credible long-term demand and effective risk management.
Building a High-Integrity Market Framework
TRACTION highlights four integrity principles: additionality, permanence, robust quantification, and contributions to Just Transition and sustainable development goals.
It also recommends phased closures and plant repurposing, such as for battery storage, to enhance grid stability and sustain emissions reductions.
Proceeds from energy transition credits can accelerate renewable deployment, bridge cost gaps and support community resilience through re-employment, upskilling and small-business development.
The report cites tools such as carbon credit insurance and structured agreements linking coal retirement and renewable build-out to improve bankability.
Initiatives like advanced market commitments and the Kinetic Coalition aim to aggregate buyers and strengthen confidence in high-integrity credits.
MAS said 21 entities, including the Government of Singapore, have endorsed a Statement of Support to participate in energy transition credit projects through offtake, financing or underwriting.
Signatories include corporates, financial institutions, multilateral development banks and sovereign participants.
With TRACTION’s mandate complete, the next phase will focus on pilot projects led by the Rockefeller Foundation and the Kinetic Coalition.
MAS said collaboration among governments, financiers and development partners will be key to scaling adoption and building a pipeline of high-integrity projects.
“The case for Asia’s coal-to-clean transition remains compelling, with the potential to strengthen energy access, affordability and reliability for local communities. Achieving scale and impact across Asia will take time and collective action from the ecosystem, given the unique characteristics in Asian markets.
TRACTION’s work demonstrates that energy transition credits can serve as a credible financing instrument to accelerate this transition, while ensuring it is inclusive and economically viable. MAS will continue to work closely with industry leaders, financiers and international partners to support the development of high-integrity energy transition credits to facilitate Asia’s transition.”
said Leong Sing Chiong, Deputy Managing Director (Markets and Development), MAS.
The report concludes that integrity, scalability and demand-building must underpin future market development and notes that lessons from Asia’s coal-to-clean transition could guide the use of transition credits in other hard-to-abate sectors such as heavy industry.
Featured image: Edited by Fintech News Singapore, based on image by digitizesc via Freepik
