A just clean energy transition is broadly understood as the process of placing people, workers, and communities at the center of the shift to affordable and modern energy systems.

Since May 2025, Kinetic Coalition has collaborated with partners to develop a proof of concept for a new asset class of high integrity “energy transition credits” (ETCs) to support early coal plant retirement and renewable energy development. These credits create a revenue stream necessary for host countries or coal asset owners to unlock the financing needed to implement energy system transformation strategies.

Kinetic is focusing on three pilot initiatives in the Philippines, Chile, and the Dominican Republic. These pilots will serve as a blueprint for other emerging and developing economies (EMDEs) to meet their growing energy demand, while transitioning to modern and clean energy systems. A just transition is at the forefront of our minds as we work to support the early retirement of the South Luzon Thermal Energy Corporation (SLTEC) plant, a two-unit 246 MW coal-fired power plant owned by ACEN, the Ayala group’s listed energy company with a large portfolio across the Asia Pacific region. The plant employs 189 workers, and this early retirement project will offer valuable lessons to scale energy systems’ transformation with just transition as a central value.

A Just Transition and Safeguards Framework

As a condition for all projects and programs, Kinetic Coalition is considering applying the Just Transition and Safeguards Framework towards its pilots to ensure ETCs reflect robust social and environmental safeguards, providing integrity and stakeholder rights. Developed by the Environmental Defense Fund (EDF), it is a principles-based approach to scaling clean energy with equity and fairness. This holistic model draws from existing standards, including Just Energy Transition Partnerships, Accelerated Coal Transition programs, the Cancun Safeguards, and aims to advance the Sustainable Development Goals.

The Framework sets a high bar, requiring countries to have either a Nationally Determined Countribution (NDC) with a power sector target, or a Just Energy Transition Plan, or a commitment to preparing one. It is grounded on concepts of procedural, distributive, recognitional, and restorative justice, supported by ten mandatory safeguards, including:

• Alignment with a host jurisdiction’s just energy transition plan and/or related policies,
• Decommissioning and demolition of coal-fired power plants,
• Disclosure of information and facilitation of stakeholder engagement,
• Implementation of anti-corruption measures,
• Management of land acquisition, restrictions on land use, and involuntary resettlement,
• Establishment of a grievance redress mechanism,
• Assessment and management of social risks,
• Evaluation and sustainable management of environmental risks, resource efficiency, pollution prevention, biodiversity conservation, and natural resources,
• Preservation of cultural heritage, and
• Assurance of secure energy supply.

SLTEC’s early retirement will test how these principles can be translated from ideals to real world safeguards, benefitting workers and local communities, while learning how to balance stakeholder representation with timing and expectations. Kinetic will observe how these safeguards will be reflected in practice, monitoring how they could co-exist with the requirements mandated by the methodology approved for SLTEC’s early retirement, while filling any gaps.

SLTEC’s Early Retirement Strategy

In November 2022, ACEN announced its full divestment from SLTEC, committing to an early retirement by 2040 inspired by the Asian Development Bank’s Energy Transition Mechanism, a blended finance approach to accelerate coal phase-out in Asia. While this was a significant step forward, ACEN wanted to go further, aiming for early closure with full replacement with clean energy as early as 2030, leveraging ETCs to make this a financially viable outcome. This accelerated timeline would yield an estimated reduction of 19 MMTCO2e between 2030 and 2040 – a significant win for the climate.

The methodology for generating ETCs for the SLTEC project was developed by the Coal to Clean Credit Initiative (CCCI) and approved by Verra in May 2025. It embeds social and economic safeguards for affected workers and communities, requiring that 2% of the net carbon revenue be dedicated to a just transition plan, alongside mandatory design, implementation and detailed budget review procedures.

In parallel, ACEN is developing a Just Energy Transition (JET) Roadmap addressing six priority areas centered on three principles: 1) Protecting People and Livelihoods, 2) Embedding Strong Environmental and Social Standards, and 3) Enabling a Fair and Orderly Transition from Coal to Clean Energy.

ACEN has already begun stakeholder engagement through employee town halls and small group sessions for SLTEC employees to raise questions and has planned personalized transition pathways to support them. These pathways range from retention in repurposed assets, transition to other roles within ACEN – which is already underway in some cases – and potential moves within the broader Ayala group. As a last resort, retirement or redundancy are among the considered options.

Working with a third-party consultant, a full implementation plan will be refined by the first half of 2026, proposing metrics to measure success and strategies to enable local economic development.

A Learning Opportunity

Applying the EDF Just Transition and Safeguards Framework at a project-level will test its adaptability. The EDF Framework and Verra’s methodology share a community-driven approach, grounded in transparency, inclusivity, and consensus building, prioritizing alignment with national energy plans, social protection, and environmental safeguards. They also underscore the importance of free, prior, and informed consent (FPIC), ensuring that affected communities have a voice in the transition process.

However, their approaches differ in how they translate these values into practice. EDF presents a principle-based pathway, calling for minimal disruption, robust stakeholder engagement and cultural safeguards, supported by broad operational and outcome indicators. In contrast, Verra’s methodology mandates concrete procedural requirements, such as six months’ severance, prioritized re-employment, skills training, job seeking support, and compensation packages, alongside a requirement to allocate at least 2% of the net carbon revenue to a just transition plan. Kinetic hopes to draw upon the strengths of each approach to craft a robust blueprint for a just transition that addresses the needs of EMDEs facing similar power-sector challenges.

Kinetic is excited to use this pilot to see how principles from the EDF Just Transition and Safeguards Framework and Verra’s methodology could be operationalized to scale the coal-to-clean transition, with just transition at the core. As 2025 draws to a close, Kinetic Coalition is preparing for an action-oriented 2026, accelerating the transition to modern energy systems in a way that is inclusive, fair, and transformative.