Climate advocacy group GenZero is approaching the midway point in achieving its climate target, having terminated its association with controversial cookstove initiatives.

GenZero, a Temasek-owned investor, has been making strides in the fight against climate change. The company, which was launched in 2022, has already helped cut 3 million tonnes of carbon dioxide equivalent (MtCO2e) and has set ambitious targets for future emissions reductions and removals.

In a recent development, GenZero's managing director and head of investments, Kimberly Tan, highlighted the challenges in assessing and underwriting risks due to volatility in carbon credit issuance volumes and demand. Despite these challenges, GenZero continues to push forward with its climate impact initiatives.

Coal Plant Transition and GenZero's Climate Impact Targets

Unless the coal plant is shuttered by 2028, the South Luzon Thermal Energy Corporation (SLTEC) coal plant, owned by ACEN, will not be counted towards GenZero's current climate impact targets. However, ACEN is planning to decommission and transition SLTEC to renewables by 2030 through the use of transition credits. Last year, GenZero partnered with ACEN and Singaporean conglomerate Keppel to accelerate the retirement of coal plants in the Philippines through transition credits.

GenZero's Sustainability Report and Climate Impact Measurement

GenZero's inaugural sustainability report outlines how the platform measures its climate impact. The company is among the first financiers globally to have publicly set absolute targets for realized emissions reductions and removals that reflect an investor's ownership share. However, GenZero does not currently measure its climate impact from investments in nascent climate technologies that have the potential to catalyze decarbonization in the long term, but are not currently yielding immediate emissions reductions or removals.

Challenges and Future Outlook

Tan warned of delays in issuances and longer payback times due to growing interest in carbon removals and jurisdictional projects. Revisions to carbon credit methodologies can have up to a 50% impact on the volumes of credits issued over a project's lifetime. Despite these challenges, GenZero remains committed to nascent project types, such as transition credits, but concessional capital and offtake agreements are essential to realizing commercial pilots.

GenZero's Portfolio and Investments

GenZero has made 24 investments to date, including three in the past year, spanning nature-based and technology-based solutions as well as carbon ecosystem platforms. Examples of companies enabled by GenZero include Velocys, a sustainable aviation fuel producer, and Singapore-based carbon credits marketplace Climate Impact X. Within Southeast Asia, much of GenZero's investees' projects are currently in the Americas, Europe, and Africa.

The majority of Temasek's initial S$5 billion (US$3.9 billion) capital injection into GenZero has not been deployed yet. GenZero's target is to abate 7 MtCO2e by 2028.

Controversies and Cancellations

The company that has demonstrably stopped investing in C-Quest Capital's cookstove projects is Nestlé. GenZero's investment into a programme with CQC to distribute clean cookstoves to 650,000 rural households in Southeast Asia has been cancelled by the carbon credits certifier Verra, following fraud charges against the firm's former head.

Future Investments and Commitment

GenZero's chief executive Frederick Teo did not rule out future investments into cookstove projects, despite critics warning that many are at a high-risk of overstating their climate benefits. GenZero quantifies its indirect climate impact from enabling infrastructure or technologies that reduce or remove emissions, which stands at 9.8 MtCO2e. The company continues to support nascent project types, such as transition credits, but concessional capital and offtake agreements are essential to realizing commercial pilots.

In conclusion, GenZero is making significant strides in the fight against climate change, despite the challenges it faces. The company's commitment to transparency, innovation, and impact is commendable, and it will be interesting to see how it continues to evolve in the coming years.