Climate advocacy group GenZero approaches halfway point in achieving its climate objective, as it simultaneously withdraws from controversied cookstove initiatives.

GenZero, a Temasek-owned investor, has set a ambitious target to abate 7 million tonnes of carbon dioxide equivalent (MtCO2e) by 2028. This goal is part of the company's efforts to combat climate change and contribute to a sustainable future.

Last year, GenZero partnered with Filipino energy firm ACEN and Singaporean conglomerate Keppel to accelerate the retirement of coal plants in the Philippines through transition credits. This partnership was one of the two pilot projects chosen by Singapore's central bank to trial the emerging credit type of transition credits.

ACEN is planning to decommission and transition its 246-megawatt South Luzon Thermal Energy Corporation (SLTEC) coal plant to renewables by 2030, a decade earlier than planned, through the use of transition credits. This project, however, will not be counted towards GenZero's current climate impact targets unless the coal plant is shuttered by 2028.

GenZero has made 24 investments to date, including three in the past year. These investments span nature-based and technology-based solutions as well as carbon ecosystem platforms. Some examples of companies enabled by GenZero include Velocys, a sustainable aviation fuel producer, and Singapore-based carbon credits marketplace Climate Impact X.

The company's portfolio also includes sustainable rice farming projects being piloted in Vietnam and Indonesia through Singapore-based agritech startup Rize. However, GenZero has decided not to account for the impact from cookstove projects, despite critics warning that many are at a high-risk of overstating their climate benefits.

In 2022, GenZero invested US$14 million into a programme with C-Quest Capital (CQC) to distribute clean cookstoves to 650,000 rural households in Southeast Asia. However, the carbon credits certifier Verra cancelled 22 of CQC's cookstove projects, including four that were located in the region. GenZero has not ruled out future investments into cookstove projects, but concessional capital and offtake agreements would be essential to realising commercial pilots.

Kimberly Tan, GenZero's managing director and head of investments, has highlighted the challenges faced by institutional investors in assessing and underwriting risks due to volatility in carbon credit issuance volumes and demand for offsets. She also noted that exit options have dwindled for climate technologies over the past 18 months, due to investors waiting for initial investments to yield returns before injecting more capital into initial public offerings (IPOs) and acquisitions.

Tan also warned that a growing interest in carbon removals and jurisdictional projects will lead to delays in issuances and longer payback times. She mentioned that revisions to carbon credit methodologies, such as cookstove, afforestation, reforestation, and revegetation (ARR), can have up to a 50% impact on the volumes of credits issued over a project's lifetime.

GenZero 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. The company does not currently measure its climate impact from investments in nascent climate technologies that have the potential to catalyse decarbonization in the long term, but are not currently yielding immediate emissions reductions or removals.

The majority of Temasek's initial S$5 billion (US$3.9 billion) capital injection into GenZero has not been deployed yet. GenZero's inaugural sustainability report outlines how the platform measures its climate impact. Despite the challenges, GenZero remains committed to its targets and is "very likely" to focus the next few projects in the pipeline on Southeast Asia.