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Study conceived and funded by Carbon Market Watch

Assessment of VCS methodology VM0052 on Accelerated Retirement of Coal-Fired Power Plants using a Just Transition and its associated modules VMD0060 and VMD0061

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Transitioning the world away from coal is the most important step for meeting the long-term temperature goals of the Paris Agreements. Reaching these goals requires the early retirement of many coal-fired power plants (CFPPs). Exploring different policy options that can support this transition is therefore crucial. This can include well-established approaches, such as regulations or emissions trading systems, as well as innovative approaches such as using carbon credits to incentivise accelerated retirements. The effectiveness of the latter largely depends on the ability to ensure high environmental integrity of such credits. Robust quantification methodologies that ensure the additionality of the mitigation activities, conservativeness in quantifying emission reductions and the prevention of double counting are key in this regard. Given that retiring even a single CFPP would likely result in the issuance of a large number of credits, high integrity is paramount not only for these projects but also the credibility of carbon crediting markets. In 2025, the Verified Carbon Standard (VCS) adopted the methodology VM0052 and its modules VMD0060 and VMD0061, creating the first methodological framework for quantifying the emission impact of projects phasing out CFPPs. The methodology allows issuing carbon credits for the emission reductions resulting from an early retirement of existing CFPPs if project proponents replace parts of its generation capacity with paired renewable power. In this study we assessed the robustness of this new methodology and its modules, by benchmarking them against different quality assessment frameworks and best practices in carbon crediting. We further used the case of the South Luzon Thermal Energy Corporation CFPP in the Philippines – which potentially will be a pilot project under VM0052 – to illustrate our findings with real case circumstances.