Japan’s Mitsubishi Corp. and its subsidiary, Diamond Generating Asia (DGA), have joined a multinational effort to retire a 246-megawatt coal plant in the Philippines a decade earlier than planned, using a new climate financing mechanism known as Transition Credits.

ACEN Corp. confirmed in a regulatory filing Wednesday that the two Japanese firms signed a Deed of Accession to a 2024 Memorandum of Understanding with ACEN, GenZero, and Keppel Ltd. to accelerate the closure of the South Luzon Thermal Energy Corp. (SLTEC) coal plant from 2040 to 2030.

The move marks one of the first global applications of the Transition Credits scheme, which awards carbon credits to projects that cut emissions by replacing coal with renewable energy. The credits are expected to help finance the shift to clean energy while providing support for affected workers and communities.

“We are honored to join this landmark initiative with ACEN, GenZero, and Keppel, which represents one of the world’s first steps toward realizing a credible and scalable Transition Credits scheme,” said DGA CEO Shinichiro Suzuki.

Mitsubishi and DGA’s participation could also enable access to Japan’s carbon market and support the country’s emissions trading system, stakeholders said.

“By pioneering the Transition Credits mechanism, we are not only accelerating decarbonisation but also demonstrating a viable pathway for coal-dependent economies to transition sustainably,” said ACEN CEO Eric Francia. “We hope this will serve as a catalyst for other coal plant owners to embark on their clean energy journey.”

GenZero CEO Frederick Teo said the credits provide a “breakthrough tool” to raise the capital needed to retire coal assets ahead of schedule.

“We are excited to welcome Mitsubishi and DGA on board this pioneering initiative, which not only advances our commitment to a net-zero future, but also establishes a scalable model for sustainable energy transformation across the region,” Teo said.

ACEN has worked on the Transition Credits framework since 2023 with the Monetary Authority of Singapore and The Rockefeller Foundation. The framework has undergone public consultation and is seen as a potential model for other emerging markets.

Mitsubishi and DGA are long-time partners of ACEN, including on renewable energy projects such as wind farms in Ilocos Norte.