Amazon, alongside Meta, Netflix, Mastercard, PepsiCo, and others, are leading a shift in carbon credits by backing the early retirement of coal-fired power plants. They’ve joined the Kinetic Coalition, a global alliance of more than 20 major companies working to unlock investment in clean energy in emerging economies. This marks a big step in climate action—paying to close coal plants early instead of funding tree-planting or technology offsets.
What Are Early Retirement or “Transition” Credits?
Transition credits differ from traditional carbon credits. Transition credits pay plant owners to close coal units early. This approach differs from funding for projects like forests or renewable energy after emissions have occurred. Instead, it avoids future emissions and makes room for clean power.
Closing a coal plant early can cost hundreds of millions of dollars. For instance, research showed that winding down a 1-GW plant five years early would need about $310 million. Transition credits are a helpful financial tool. They cover closure costs, support displaced workers, and help build new clean energy projects.
This concept has already started in Southeast Asia. And Verra, a key player in carbon markets, has launched a method to certify early coal retirements. This method sets high standards for clean energy replacements and supports local jobs.
One pilot in the Philippines aims to close a coal plant a decade early—avoiding up to 19 million tonnes of CO₂. The new step is scaling this model with corporate backing, as what the Kinetic Coalition does.
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The Kinetic Coalition: Big Names Powering Change
Amazon is part of the Kinetic Coalition, a buyers’ alliance organized by the Center for Climate and Energy Solutions (C2ES). The Coalition connects major buyers with coal-closure projects in emerging economies. Other major companies in the alliance include PepsiCo, McDonald’s, Meta, Nike, Salesforce, and Morgan Stanley.
Nat Keohane, President of C2ES, noted:
“Energy transition credits can accelerate the transition to clean energy systems for emerging economies, help companies reduce their supply chain emissions – and, most importantly, bring economic, health, and environmental gains to local communities. They offer an opportunity to achieve emission reductions at scale while benefiting companies and people – and Kinetic is excited to seize it.”
The Coalition wants to purchase reliable transition credits. These credits will help with early plant retirements, renewables, grid upgrades, and support local communities. It already explores pilots in the Dominican Republic, Chile, and the Philippines.
- In the Philippines, where coal still powers close to 60% of the grid, the coalition plans to support the early retirement of a major coal-fired plant. The goal is to replace it with a mix of clean energy and storage, ensuring no gap in supply.
- In Chile and the Dominican Republic, the projects aim to modernize electricity grids, not just shut down coal. These efforts seek to add more renewables, cut reliance on fossil fuels, and boost reliability for consumers.
The credits created from these projects may serve multiple purposes. For example, Schneider Electric, one of the coalition’s participants, is exploring several options. It may use the credits to offset its own emissions or sell them to clients through its sustainability consulting arm, EcoAct. This shows how credits can fit into both corporate climate plans and broader client services.
By pooling demand, the Kinetic Coalition can support large-scale impact. Members commit capital upfront—helping governments and power companies plan and fund the shift away from coal. The alliance could channel billions of dollars by 2035, driven by strong corporate climate goals.
Tackling Coal Power: Pathways to Clean Energy in Emerging Markets
Coal-fired power remains a major obstacle for climate progress, with emissions rising by 0.9% (135 Mt CO₂) in 2024 and coal making up about 36% of global electricity in 2023. Many emerging economies still rely on coal to meet growing energy demands.
Initiatives like the Kinetic Coalition aim to close coal plants early, replacing them with clean energy while supporting jobs and communities. BloombergNEF estimates that over $2.6 trillion in clean energy investment is needed in emerging markets by 2050, and innovative tools like transition credits can help unlock this vital capital.
The early pilots may shape how we manage energy transitions. They can also guide the responsible and fair use of carbon credits at scale.
The group is ensuring credibility by aligning with top standards like ICVCM and CORSIA. They are also working with the Advanced and Indirect Mitigation Platform. Projects can use Verra’s 2024 early coal retirement method. They may also follow new guidelines from the Gold Standard and the Environmental Resources Trust.
The Corporate Trailblazers
Amazon, Meta, Netflix, and Mastercard have been major buyers of voluntary carbon credits for years. Their shift to transition credits shows a new path. They now focus on real-world emissions reductions instead of offsets, such as forest protection.
They are also part of the Energy Transition Accelerator (ETA). This initiative was launched by the U.S. State Department, Bezos Earth Fund, and Rockefeller Foundation. Amazon, Mastercard, Meta, McDonald’s, PepsiCo, and others endorsed its approach at Climate Week 2024. The ETA wants to boost low-carbon energy in developing markets. It does this by using high-quality credits and fair transition plans.
If transition credits gain a firm foothold, they could channel hundreds of billions into clean energy systems. Estimates suggest the Kinetic Coalition alone could mobilize $72–207 billion by 2035.
Trends and Forecasts: How Billions Could Shift the Energy Mix
The carbon credit market is growing fast. The voluntary market reached around $2 billion in 2024 and may grow to $24 billion by 2030—around 35% annual growth. Add in compliance systems, and the total market neared $115 billion in 2024, growing at ~16% annually.
Transition credits are a newer segment, but momentum is building with these trends:
- Regulatory support. Singapore is drafting rules for high-integrity carbon credits. Japan is building a carbon market framework. South Korea and China are also exploring credit systems.
- Verra’s methodology. Its VM0052 method for coal-plant retirement was a major milestone. It sets strong guardrails for environmental impact and community protection.
- Tech for confidence. Blockchain, satellite tracking, and AI are helping verify, trace, and audit credits—reducing fraud.
- Investor demand. Net-zero commitments from thousands of companies mean growing demand for real-impact credits.
- Public-private action. Groups like ETA, Kinetic Coalition, and CCCI demonstrate cross-sector momentum to scale these solutions.
By investing in transition credits, Amazon and other Kinetic Coalition partners are helping forge a new climate finance path. Instead of offsetting emissions, they are funding early closure of coal plants—cutting future carbon emissions before they happen.
With robust standards, growing tech tools, and strong corporate demand, transition credits could become a major asset in achieving global climate goals—while supporting clean energy in emerging economies.
