Many companies have ambitious climate goals and are looking for credible ways to address emissions across global value chains and demonstrate climate leadership, while strengthening supply chain resilience and strategic competitiveness. Replacing fossil fuel power with clean energy is one of the fastest and most effective ways to increase supply chain certainty and reduce Scope 3 greenhouse gas emissions. But directly transitioning to clean energy across complex global supply chains can be difficult, particularly when companies face challenges related to procurement, infrastructure, cost, or access to clean power.
Energy transition credits (ETCs) offer a new tool to help finance system-level clean energy solutions in these markets, including where direct corporate procurement or investment may not be feasible.
What are energy transition credits?
Energy transition credits are a new type of high-integrity carbon credit designed to support the transition from fossil fuel power to clean energy systems in emerging and developing economies.
They represent verified emissions reductions in the power sector, achieved by replacing fossil fuel power with clean electricity and/or making critical system investments, such as grid modernization, energy storage, and clean power generation, that enable and result in broader emissions reductions.
Crediting methodologies for energy transition credits are designed to meet stronger international standards, to ensure they deliver real, measurable climate benefits while protecting local communities. Kinetic Coalition’s model uses only high-integrity methodologies that meet robust integrity principles, such as the Core Carbon Principles of the Integrity Council for the Voluntary Carbon Market (ICVCM), UNFCCC Paris Agreement Crediting Mechanism (PACM) for Article 6 transactions, or the Emission Unit Eligibility Criteria for the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).
Why energy transition credits?
Many countries are committed to building cleaner, more reliable energy systems, but financing remains a major barrier. Existing fossil fuel power plants often continue operating because of longterm financial and contractual arrangements, even when cleaner alternatives are available. Mobilizing private investment is essential because public finance alone cannot meet the scale of investment required.
Energy transition credits can help bridge that gap by creating a new source of grant-like funding to make early fossil fuel retirement and clean energy investment possible, unlocking larger pools of finance to move these investments forward.
At the same time, energy transition credits help companies to support decarbonization at the system level without having to establish PPAs or use other mechanisms outside their core business model, leading to cleaner, more reliable and affordable electricity systems that support supply chain resilience while advancing climate objectives. These projects also benefit local communities by reducing air and water pollution and creating new economic opportunities.
First Projects
Kinetic Coalition is actively building buyers for initial projects that will have significant climate and environmental impact using new and innovative high-integrity methodologies:
South Luzon Thermal Energy Corporation (SLTEC), Philippines: Kinetic is working with an asset owner to accelerate the retirement of a 246-MW coal-fired power plant (“SLTEC”). The plant would be retired up to 10 years early, generating up to 19 million tons of CO₂.e under the Verra’s Accelerated Retirement of Coal-Fired Power Plants Using a Just Transition (VM0052). It would be fully replaced by clean energy (solar+storage), accelerating the build out and adoption of clean energy technologies and increasing energy security in the Philippines.
Dominican Republic: The government of the Dominican Republic has 2030 goals to reduce emissions from electricity generation by expanding renewable sources and improving the energy grid. Kinetic is pursuing the use of a jurisdictional (sector-wide) carbon credit methodology – Standard for the Transformation of the Electric Power Sector (STEPS) under development by Winrock’s Environmental Resources Trust – that could potentially reduce ~6 million tons of CO₂.e and allow for the suite of investments necessary to enable a clean energy transition across the Dominican Republic. This will create affordable electricity to power the economy and create reliable energy for 11 million people in the country.
Kinetic is assessing additional projects in emerging and developing economies where energy transition credits could help catalyze action and scale impact. For example, Kinetic is exploring the potential use of Gold Standard’s Joined-Up Sustainable Transition (JUST): Fossil Fuel Generators to address captive fossil generation and shift to renewable energy in apparel manufacturing countries such as Bangladesh, Sri Lanka, and Vietnam.
Kinetic Coalition: Mobilizing climate finance
Kinetic Coalition mobilizes innovative, catalytic finance through energy transition credits to accelerate the transition to clean, affordable, and resilient energy systems in developing and emerging economies. Kinetic is creating a market for high-integrity energy transition credits by building and pooling demand from companies and governments and connecting them with asset owners and governments in emerging and developing economies seeking to reduce emissions.
As Kinetic’s Secretariat, C2ES supports Kinetic’s strategy, operations, and collaboration as part of its broader work to advance practical climate solutions. Kinetic is:
A trusted, independent partner. Kinetic serves as a neutral convener, bringing together governments, companies, technical experts, financial institutions, and other partners to advance a trusted, scalable market of high-quality energy transition opportunities.
Focused on integrity. Kinetic is helping build a market for energy transition credits that represent real, measurable emissions reductions and meaningful benefits for local communities.
Designed to unlock investment at scale. By crowding in buyers to provide advance demand signals, Kinetic helps create clear market certainty needed to catalyze private capital and reduce financing risk for large-scale clean energy transition programs.
Built for collaboration and impact. Kinetic aggregates demand and pools resources to reduce transaction costs, standardize procurement process, and provide access to a pipeline of high-integrity supply, building confidence and lowering barriers to participation. Companies could leverage small amount of resources to catalyze large-scale, real economy impact, with the potential to reduce over 100 million tCO₂.e by 2030.
Kinetic Coalition is helping turn ambition into practical solutions that accelerate the global transition to clean, reliable, and affordable energy.
Interested in accelerating the energy transition? kinetic-coalition@c2es.org