WALKING ON HOT COAL

Carbon Market Watch argues that Verra’s VM0052 methodology for coal transition credits is significantly flawed and should be put on hold. The briefing identifies critical risks of carbon leakage due to low renewable energy pairing requirements, weaknesses in baseline-setting and additionality tests, and inadequate safeguards against double issuance. It also finds that just transition provisions are unreliable, particularly regarding benefit-sharing and stakeholder mediation. Using a case study of the South Luzon Thermal Energy Corporation (SLTEC) in the Philippines, the document illustrates how the methodology could allow for the overissuance of credits that do not represent real emission reductions.

• Low requirements for pairing retired coal capacity with renewable energy create a high risk of carbon leakage, as most lost generation could be replaced by other fossil fuels. The methodology only requires 10% of lost capacity to be replaced by paired renewables at the start, rising to 40% by the end of the first crediting period.
• The methodology's restriction on new coal commitments is insufficient because it applies only to government utilities, leaving a loophole for independent power producers to build or expand coal plants, which could negate the climate benefits of early retirements.
• Baseline-setting is prone to overestimation because it relies on static assumptions for electricity prices and generation that do not reflect future market shifts, and it fails to require a reassessment of the 'financially attractive retirement date' during crediting period renewals.
• Additionality testing is weakened by vague terminology and a backwards-looking common practice analysis that is unsuitable for countries with young coal fleets, such as the Philippines, where historical retirements may be zero despite future commitments to close plants.
• There is a significant risk of double issuance because the methodology lacks safeguards to prevent both a coal retirement project and the renewable energy projects replacing its capacity from claiming credits for the same emission reductions.
• Just transition provisions are considered unreliable, specifically the 2% benefit-sharing rule based on net rather than gross revenue, which allows developers to report lower profits to reduce payouts to affected stakeholders.
• The SLTEC pilot project in the Philippines demonstrates that early retirement benefits could be cancelled out at the national level if other independent power producers construct new coal plants in the same region.

APA

Wyburd, I. (2025). WALKING ON HOT COAL. Carbon Market Watch. https://carbonmarketwatch.org/wp-content/uploads/2025/12/Walking-on-hot-coal.pdf

Chicago

Wyburd, Inigo. WALKING ON HOT COAL. Carbon Market Watch, 2025. https://carbonmarketwatch.org/wp-content/uploads/2025/12/Walking-on-hot-coal.pdf.

Wikipedia

{{cite report |last1=Wyburd |first1=Inigo |title=WALKING ON HOT COAL |publisher=Carbon Market Watch |date=December 2025 |url=https://carbonmarketwatch.org/wp-content/uploads/2025/12/Walking-on-hot-coal.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{wyburd2025walking, author = {Wyburd, Inigo}, title = {{WALKING ON HOT COAL}}, institution = {Carbon Market Watch}, year = {2025}, month = dec, url = {https://carbonmarketwatch.org/wp-content/uploads/2025/12/Walking-on-hot-coal.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }