Progress towards GenZero's climate target accelerates, abandoning controversially tainted cookstove initiatives
In a significant move towards a greener future, ACEN, a leading energy company, has announced plans to decommission its 246-megawatt South Luzon Thermal Energy Corporation (SLTEC) coal plant and transition to renewable energy sources by 2030. This early transition, a decade ahead of the original plan, will be facilitated by the use of transition credits.
Meanwhile, GenZero, a Temasek-owned investor, has been making strides in the fight against climate change. GenZero, it should be clarified, is not a fund that manages external capital, but rather an entity focused on investing in climate solutions.
Kimberly Tan, GenZero's managing director and head of investments, has highlighted the challenges faced by institutional investors in assessing and underwriting risks due to volatility in carbon credit issuance volumes and demand for offsets. She also warned that growing interest in carbon removals and jurisdictional projects will lead to delays in issuances and longer payback times.
Despite these challenges, GenZero has made significant progress. Since its launch in 2022, the company has cut 3 million tonnes of carbon dioxide equivalent (MtCO2e), and its indirect climate impact stands at 9.8 MtCO2e. This impact is quantified through GenZero's support of infrastructure or technologies that reduce or remove emissions.
GenZero's portfolio includes a variety of projects. One such project is a partnership with Filipino energy firm ACEN and Singaporean conglomerate Keppel to accelerate the retirement of coal plants in the Philippines through transition credits. This partnership was one of the two pilot projects chosen by Singapore's central bank to trial the emerging credit type of transition credits.
Another project within GenZero's portfolio is the sustainable rice farming projects being piloted in Vietnam and Indonesia through Singapore-based agritech startup Rize. However, GenZero does not currently measure its climate impact from investments in nascent climate technologies.
In a recent development, GenZero has decided not to account for the impact from CQC's cookstove projects, due to fraud charges against its former head. As a result, GenZero is no longer invested in cookstove projects developed by United States-based C-Quest Capital (CQC).
GenZero has set absolute targets for realized emissions reductions and removals, making it among the first financiers globally to do so. Its target is to abate 7 MtCO2e by 2028. The majority of Temasek's initial S$5 billion (US$3.9 billion) capital injection into GenZero has not been deployed yet, leaving room for future investments and projects.
GenZero remains committed to nascent project types, such as transition credits, but concessional capital and offtake agreements are essential to realising commercial pilots. The company is also open to future investments into cookstove projects, should the circumstances prove favourable.
In conclusion, GenZero's efforts towards climate change mitigation are bearing fruit, with significant carbon reductions achieved and strategic partnerships forming to accelerate the transition from fossil fuels to renewable energy. The company's commitment to transparency and its focus on nascent project types make it a key player in the fight against climate change.
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