Japan’s Mizuho Bank and impact investment platform GenZero, owned by Singapore state investor Temasek, have signed a strategic partnership to develop transition credits aimed at accelerating the early retirement of coal-fired power plants across Asia​.

The two organizations will collaborate, they say in the terms of their memorandum of understanding, to quantify emissions reductions from coal plant closures, convert those savings into carbon credits and reinvest the proceeds into renewable energy projects.

With Asia still heavily reliant on coal, the key challenge has been who bears the financial burden of shutting down plants early. Transition credits provide a market-based solution, ensuring that companies transitioning away from coal can access funding without destabilizing economies that may be reliant on the industry.

This collaboration aligns with the bank’s revised 2024 environmental and social management policy, which allows financing for coal plant retirements if a credible decarbonization plan is in place​. It also supports GenZero’s broader mission of investing in nature-based solutions, deep decarbonization technologies and carbon market infrastructure​.

As financial institutions increasingly look for scalable climate finance solutions, this transition credit framework, both parties say, could serve as a model for future clean energy financing.

A fair cost-sharing mechanism, notes Shinichi Tsunoda, the bank’s general manager of sustainable business promotion, is crucial to making decarbonization viable. And with GenZero a leader in this space, the partnership, he adds, is a significant step towards a just transition​.

“GenZero and Mizuho will leverage our collective expertise and regional connections to collaborate on energy transition opportunities, build greater awareness for transition credits and unlock opportunities to support coal-to-clean initiatives,” adds Frederick Teo, the impact investor’s CEO. “We look forward to working with Mizuho and other like-minded partners to scale decarbonization efforts and drive clean energy transitions, especially in Asia.”