Mizuho And GenZero Partner To Develop Transition Credits

Tokyo-based Mizuho Bank and GenZero, a decarbonization-focused investment platform owned by Temasek, have announced a strategic partnership to develop transition credits aimed at accelerating the early retirement of coal-fired power plants. The initiative seeks to address a critical challenge in the global push for clean energy—how to finance the shift away from coal while minimizing economic disruption.

Coal remains the single largest contributor to energy-based CO2 emissions worldwide. According to the International Energy Agency (IEA), coal accounted for 45% of emissions from fuel combustion in 2022, significantly surpassing oil at 33%. Despite growing investments in renewable energy, coal continues to be a dominant source of energy supply, making up 28% of the global energy mix, only slightly behind oil at 30%. In a 2022 report, the IEA estimated that nearly $10 trillion in investments would be required by 2050 to transition the global energy sector away from coal-fired electricity.

Recognizing the scale of this challenge, Mizuho and GenZero are focusing on the development of transition credits as a financial mechanism to support coal plant operators in retiring their facilities ahead of schedule. These credits work by assessing the CO2 emissions that would result from a coal plant’s continued operations and comparing them to the emissions reductions achieved through its early closure. The difference is then converted into carbon credits, which can be traded in carbon markets to generate funding for plant operators.

The companies believe that transition credits could play a significant role in the global effort to phase out coal and replace it with cleaner energy sources. By creating a financial incentive for early coal plant retirements, these credits could help cover the costs associated with decommissioning coal infrastructure and securing alternative energy solutions. This is particularly relevant in Asia, where coal remains a key energy source and where the financial burden of transition is a major concern.

Shinichi Tsunoda, Operating Officer and General Manager of Mizuho Bank’s Sustainable Business Promotion Department, emphasized the importance of transition credits in facilitating a fair and efficient shift to clean energy. He noted that one of the biggest hurdles in moving away from coal is determining who will bear the costs of the transition. Transition credits, he explained, offer a way to ensure a fair evaluation of decarbonization efforts while distributing the financial burden across different regions and stakeholders. This approach, he argued, enables a faster exit from coal without triggering severe economic consequences.

By their partnership, Mizuho and GenZero intend to co-develop capital-raising tools that integrate carbon credits, as well as develop the frameworks necessary to create an operational transition credit system. Mizuho intends to push forward innovative financing techniques that use carbon credits in collaboration with GenZero to drive increased awareness of transition credits among Japanese companies. The two companies see their efforts as crucial to paving the way for increased investment in transition credit projects and fostering a broader understanding of how such credits can facilitate the clean energy transition on a global scale.

Frederick Teo, CEO of GenZero, highlighted the potential of this partnership to create new opportunities for coal-to-clean initiatives. He emphasized that Mizuho and GenZero would combine their expertise and regional networks to drive energy transition efforts, increase awareness of transition credits, and unlock new investment pathways that support the move away from coal.

The partnership marks a significant step in addressing one of the most pressing challenges in the fight against climate change. While the transition away from coal is necessary to meet global decarbonization targets, the financial and logistical complexities of this shift have made it a daunting task, particularly for economies that still heavily depend on coal for their energy needs. By creating a system where emissions reductions from early coal plant closures can be quantified and monetized, transition credits offer a pragmatic solution that aligns economic incentives with environmental goals.

As countries and corporations increasingly commit to net-zero targets, initiatives like this could prove instrumental in bridging the gap between ambition and action. By mobilizing capital to accelerate coal phaseouts, Mizuho and GenZero’s collaboration represents an important innovation in climate finance. If successful, their efforts could help reshape the global energy landscape, making the transition to a cleaner future not just an environmental necessity but also an economically viable choice.