The Monetary Authority of Singapore (MAS) has on Monday released key insights from the Transition Credits Coalition’s (TRACTION) final report, and published a statement of support for energy transition credits.

MAS said in a statement that these initiatives aim to advance the development and application of energy transition credits as a credible financing mechanism to accelerate the coal to clean transition in Asia.

TRACTION is a multi-stakeholder initiative convened by the MAS at COP28 that brings together over 30 partners.

Contextualised to Asia, where coal plants continue to contribute to one-third of the region’s greenhouse gas emissions, energy transition credits hold significant potential to mobilize capital for driving power sector decarbonization and supporting Just Transition efforts.

The final report outlines practical solutions and identifies key areas for further action to help the industry operationalize and scale the use of energy transition credits.

TRACTION’s final report builds on the earlier findings from its Interim Report, published at COP29, that examined the integrity, scalability and demand considerations for energy transition credits.

Developed in collaboration with TRACTION members and industry partners, the Final Report details practical insights, frameworks and solutions to scale the application of energy transition credits across Asia.

One of the key insights from the final report include Asia holds substantial potential for generating high-integrity energy transition credits, but success depends on addressing region-specific needs and ensuring energy reliability, access and affordability.

A third of coal-fired power plants (CFPPs) across 15 Asian markets are potentially eligible to generate energy transition credits, representing around 1 GtCO₂e of emissions reductions annually.

To realize this potential, a whole-of-ecosystem partnership is needed. For instance, governments can improve market readiness by providing clarity through national energy plans and policies, while methodology developers can explore incorporating region-specific circumstances into integrity guardrails.

Another key insight is scalability needs to be underpinned by predictable carbon revenues and robust risk-mitigation solutions.

Clear demand signals from credible buyers and innovative financing structures are key to improving bankability and attracting financier participation.

Alternative coal transition approaches, such as phased shutdown through sequential closure of boiler units to manage impact on energy reliability, can enhance project viability and stakeholder buy-in.

Meanwhile, a Just Transition is central to the credibility and long-term viability of early coal phaseout transactions in Asia.

Proceeds from energy transition credits can support Just Transition outcomes by accelerating clean energy deployment to ensure energy reliability and accessibility; maintaining energy affordability by bridging cost gaps, for example where renewables and battery storage are more expensive; and supporting community development beyond short-term compensation to build long-term community resilience through re-employment, upskilling and business support programs.

Another key insight is demand momentum for energy transition credits is growing, supported by structured participation pathways that help prospective buyers engage with confidence.

Energy transition credits offer climate and socioeconomic impact, and can form a credible component of a buyer’s diversified carbon credit portfolio strategy.

Mechanisms such as advanced market commitments and buyer coalitions can help aggregate demand, enable risk-sharing, lower due diligence costs, and send a clear offtake signal to support a pipeline of high-integrity projects.

Reflecting the growing momentum in this ecosystem, 21 public and private entities have joined in the statement to participate in energy transition credit projects through offtake, financing and underwriting arrangements.

This collective expression of interest from corporates, financial institutions, multilateral development banks, and sovereigns, including the Government of Singapore, provides plant owners and host governments with increased confidence to proceed with earlier coal retirement.

The final report marks the completion of TRACTION’s mandate.

The next phase will focus on translating TRACTION’s foundational work into concrete projects and transactions, with continued focus on integrity, transaction scalability and demand-building.

This will be led by key partners such as the Rockefeller Foundation and the Kinetic Coalition.

Given the complexity of Asia’s energy transition, the partnership of governments, financial institutions and development partners in different markets will be critical to build a robust pipeline of high-quality projects and realize the full potential of energy transition credits over time.

“The case for Asia’s coal-to-clean transition remains compelling, with the potential to strengthen energy access, affordability and reliability for local communities,” said Leong Sing Chiong, Deputy Managing Director (Markets and Development), MAS.

According to him, 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,” he added.

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