COP28: Keppel and GenZero sign agerement for sustainable aviation fuel projects in southeast Asia

Singaporean conglomerate Keppel Corp. and GenZero, a Temasek-owned investment platform company focused on accelerating decarbonization, have signed a memorandum of understanding at the UN Climate Change Conference aimed at accelerating development of sustainable fuel projects across the Asia-Pacific.

The projects under agreement will explore various bioenergy fuel projects such as biomethane, biomethanol and SAF in the Asia-Pacific, the companies said in a joint statement. The two parties will carry out feasibility studies to co-develop projects that are aimed at facilitating the early retirement of coal-fired power plants, as well as Southeast Asia's pivot to cleaner energy alternatives, such as solar power or geothermal energy.

SAF and other biofuels provide numerous advantages to decarbonize hard-to-abate industries such as aviation and marine as they are compatible with existing infrastructure even as a drop-in solution in existing fossil fuel engines.

The partnership will also explore usage of transition credits -- a new asset class of carbon credits that can be generated from reductions in emissions when high-emitting assets like coal-fired power plants are retired early and replaced with cleaner energy sources.

Southeast Asia has some of the world's youngest power plant fleets relying on coal in their energy mix to meet growing energy demands. With coal-fired generation the largest source of carbon emissions globally, the collaboration between Keppel and GenZero comes at a critical juncture as the region navigates rising energy demand and a mounting agenda to phase out coal and meet net zero targets.

"Our efforts will focus on catalyzing carbon finance to accelerate the transition through sustainable fuels for hard-to-abate sectors and innovative transition mechanisms such as transition credits for the early retirement of coal-fired power plants," GenZero CEO Frederick Teo said.

The Singapore government has conveyed that it is prepared to offtake transition credits as long as they meet Singapore's standards of environmental integrity, the companies said.

GenZero is a wholly owned by Temasek, a global investment company owned by the government of Singapore. GenZero was allocated an initial amount of $5 billion by Temasek to establish to accelerate decarbonization globally.

The agreement will draw on GenZero's climate financing expertise to guide the phase-out of coal-fired power plants and technical know-how to develop high-integrity carbon credit projects, the companies said. This will be augmented by Keppel's expertise in developing technology-based sustainability solutions and its operating capabilities in cleaner energy infrastructure such as renewables and zero- or low-emission combined-cycle power plant.

"By leveraging our combined expertise and unique energy transition support mechanisms to scale up the deployment of renewable energy and low-carbon solutions," Keppel Infrastructure Division CEO Cindy Lim said. "This collaboration will enable us to continue pushing the envelope to support the adoption of cleaner energy alternatives in the Asia-Pacific region."

Singapore's Changi Airport is "operationally ready" for SAF, the Civil Aviation Authority of Singapore in November after a 20-month pilot by the authority, GenZero and Singapore Airlines. The pilot affirmed that SAF can be safely deployed at the airport and used without modifications to existing infrastructure. In addition, the program tested a credit scheme, whereby Singapore Airline's purchase of 1,000 mt of neat SAF would generate 1,000 SAF credits that could then be sold to others looking to reduce their carbon footprints.

Platts, a part of S&P Global, assessed the price of SAF cost of production Southeast Asia on Dec. 7 at $1,487.28/mt, down $11.04/mt on the day.