MAS aims for robust transition credit demand at COP28 through coalition

TRACTION aims to develop approaches to meet these needs and expand the credit market.

The Transition Credits Coalition (TRACTION), led by the Monetary Authority of Singapore (MAS), has released an interim report outlining key considerations for using transition credits to retire coal-fired power plants (CFPPs) earlier than planned. 

Established at COP28 in 2023, TRACTION explores the potential of high-integrity transition credits as a financial tool to facilitate this transition in Asia, specifically by generating credits from emissions reductions when CFPPs are retired early and replaced with cleaner energy sources.

Transition credits require clear and rigorous standards to ensure quality and credibility. Key attributes include verifiable emissions savings, permanent emissions reduction, avoidance of emissions leakage, and alignment with Just Transition principles. 

High-integrity credits are essential to attract investors and ensure trust, MAS said.

To scale transition credits, TRACTION calls for measures like carbon credits insurance and advanced market commitments to address project risks such as timing mismatches and credit invalidation. 

Different types of buyers have varied requirements, such as geographical alignment with their operations. TRACTION aims to develop approaches to meet these needs and expand the credit market.

MAS deputy managing director Leong Sing Chiong described transition credits as a market-based tool to drive financing for coal retirement and a viable approach to support the region’s energy transition. 

TRACTION’s final report, due at COP30, will detail further strategies for implementing transition credits as a sustainable financing solution.