What it is
A transition credit is a carbon asset generated by retiring an emitting asset early, rather than by avoiding new emissions.
Coal-fired plants, including captive plants that serve smelters and industrial estates outside the national grid, run on long-term contracts that assume decades of remaining life. Retiring them early means paying for generation that has already been financed. A transition credit covers part of that cost from the emissions avoided between a plant’s contracted retirement date and an earlier one.
We are developing a transition credit methodology for the early retirement of captive coal-fired power plants in Indonesia, building on a scoping study for the government of the United Kingdom, published as Retiring Early.
Why it matters
Coal dominates Indonesian power, so cutting emissions means dealing with plants that already exist.
Plant-by-plant retirement is hard to negotiate, and captive plants fall outside most project-based methodologies such as Verra VM0052 and the Gold Standard JUST methodologies. Jurisdictional approaches such as STEPS, which credit a whole power sector, offer another route; we discussed them in our October 2026 guest lecture with Karan Capoor.
A scoping study on using transition credits to shift captive, off-grid coal-fired power plants to renewables.
Guest lecture by Karan Capoor on STEPS, a standard for crediting a whole power sector, compared with project-based transition credit methodologies.
Reform of Indonesia’s power market, where reliability, affordability, equity and decarbonization collide.
Fundamental reform for a sustainable, affordable, equitable and low-carbon power market in Indonesia.
Where the energy work is done, with the full list of active, incubating and completed projects.
The advisory practice this initiative sits within, with its programs, projects and team.