Climate action group GenZero approaches midway in pursuit of its goal, divesting from controversial cookstove initiatives.

In a significant move, GenZero, an investor owned by Temasek, has partnered with Filipino energy firm ACEN and Singaporean conglomerate Keppel to retire coal plants in the Philippines earlier than planned. This is achieved through the use of transition credits, a novel class of offsets designed to incentivise earlier coal phase-outs.

The partnership aims to decommission and transition the 246-megawatt South Luzon Thermal Energy Corporation (SLTEC) coal plant to renewable energy sources by 2030, a decade earlier than originally planned.

GenZero, however, has distanced itself from cookstove projects developed by United States-based C-Quest Capital (CQC) following the indictment of the firm's former head on fraud charges. The investment platform confirmed it is no longer invested in these projects.

Kimberly Tan, GenZero's managing director and head of investments, has highlighted the improvements in carbon credit methodologies, which have boosted the integrity of projects. However, she also acknowledged the challenges posed by the volatility in issuance volumes and demand for offsets, making it difficult for institutional investors to assess and underwrite such risks.

GenZero's portfolio includes a diverse range of investments, spanning nature-based and technology-based solutions, as well as carbon ecosystem platforms. Notable contributors to GenZero's indirect climate impact include Velocys, a sustainable aviation fuel producer, and Singapore-based carbon credits marketplace Climate Impact X.

Despite not managing external capital, GenZero has made 24 investments to date, including three in the past year. The platform has helped cut 3 million tonnes of carbon dioxide equivalent (MtCO2e) since its launch in 2022, with a quantified indirect climate impact of 9.8 MtCO2e.

GenZero has set ambitious targets for realized emissions reductions and removals, being among the first financiers globally to publicly set absolute targets that reflect an investor's ownership share. The platform aims to abate 7 MtCO2e by 2028.

Tan has warned that revisions to cookstove, afforestation, reforestation, and revegetation (ARR) methodologies can have up to a 50% impact on the volumes of credits issued over a project's lifetime. She also noted that exit options have dwindled for climate technologies over the past 18 months due to investors waiting for initial investments to yield returns before injecting more capital into initial public offerings (IPOs) and acquisitions.

Looking ahead, GenZero is "very likely" to focus the next few projects in its pipeline on Southeast Asia. The majority of Temasek's initial S$5 billion (US$3.9 billion) capital injection into GenZero has not been deployed yet.

Despite critics' warnings about the high-risk of overstating climate benefits, GenZero has not ruled out future investments into cookstove projects. The platform, however, will only consider projects that meet stringent criteria and offer verifiable carbon credits.

GenZero's inaugural sustainability report outlines how the platform measures its climate impact. The report clarifies that the platform does not currently measure its climate impact from investments in nascent climate technologies that have the potential to catalyse decarbonization in the long term, but are not yet yielding immediate emissions reductions or removals.

The report also clarifies that GenZero will not account for the impact from CQC's cookstove projects, though it believes that the new entity CQC is operating under, Bridge Carbon, is trying to get some of them re-verified under Verra.

In conclusion, GenZero continues to play a significant role in accelerating the transition to renewable energy and reducing carbon emissions, particularly in Southeast Asia. The platform's commitment to nascent project types, such as transition credits, and its ambitious targets for emissions reductions and removals, position it as a leader in the fight against climate change.