Killing them softly: Southeast Asia’s cautious quest to phase out its coal fleet using transition credits

From the coast of Balayan Bay where young children swim and play in, large vessels carrying coal from Semirara Island – a major site for mining of the dirty fuel located on the same archipelago of Calaca  – can be seen.

The ships dock at a nearby port for the coal to be unloaded and transported.

For the longest time, it would have been unthinkable for the lucrative coal facility to be retired ahead of its economic lifespan – it is merely in its ninth year of operation.

Yet as momentum for the green energy transition picks up in Southeast Asia and nations are pressured to meet their net-zero targets, the region’s regulators and the private sector seem to have worked out the financial equation to close the plant early.

The Calaca plant looks likely to be the world’s first facility to be retired and replaced with renewables using a novel class of carbon credits, known as “transition credits”.

But what about the ripple effects that the change might have on individuals and communities living near the plant, including those whose livelihoods depend on it?

While the ambitious pilot, which will see the plant closed 10 years ahead of its scheduled retirement, has generated much optimism among key stakeholders, those managing the phase-out are aware that timelines and investors cannot be the only considerations. 

For now, there is some commitment to carefully work out a just transition plan, though details are sparse. The residents of Puting Bato West are not aware of the facility’s planned early closure, Eco-Business discovered on a reporting field trip to the town.

It begs the question of how communities can be given more ownership over the movement to end coal. Will the low carbon shift bring about real benefits for them? Questions like these will have to be answered in the near horizon.