Writer: Krishnan SRINIVASAN
Social Media Team:
Countries like India, Singapore, Malaysia, and Taiwan are taking significant steps to address climate change through carbon market initiatives. These efforts aim to reduce carbon emissions and promote sustainable practices across various sectors.
India
On January 29, 2024, the central government launched a framework to promote voluntary carbon markets in the agriculture sector.
Union Minister of Agriculture & Farmers’ Welfare and Tribal Affairs, Arjun Munda, introduced the ‘Framework for Voluntary Carbon Market in Agriculture Sector and Accreditation Protocol of Agroforestry Nurseries’. He stated that the framework aims to encourage small and medium farmers to take advantage of carbon credits. He also urged the Indian Institute of Agricultural Research (ICAR) to actively contribute and “perform well in the right manner”. According to India’s latest report to the United Nations Framework Convention on Climate Change, about 15% of the country’s emissions come from the agricultural sector.
On May 21, 2024, Verra expressed appreciation for the inclusion of its Verified Carbon Standard (VCS) Program methodologies within the Indian government’s efforts to establish accessible routes for farmers to engage in the voluntary carbon market (VCM). The Ministry highlighted VCS Program methodologies available for project developers, such as VM0042 Methodology for Improved Agricultural Land Management, VM0044 Methodology for Biochar Utilization in Soil and Non-Soil Applications, and VCS Methodology VM0047 for Afforestation, Reforestation, and Revegetation. The Indian Council of Agricultural Research will lead the development of pilot projects in these areas.
Singapore
On January 1, 2019, Singapore introduced a carbon tax, marking the first carbon pricing initiative in Southeast Asia. The tax was initially set at S$5 per ton of CO2 equivalent (tCO2e) for the first five years (2019-2023) to allow emitters a transitional period to adapt. To support the nation's net-zero target, the carbon tax was increased to S$25/tCO2e starting in 2024. Further increases are planned, with the tax set to rise to S$45/tCO2e in 2026 and 2027, and aiming to reach S$50-80/tCO2e by 2030. These increments are designed to enhance the financial motivation for businesses and individuals to lower their carbon emissions in alignment with national climate objectives.
Starting in 2024, companies can use high-quality international carbon credits (ICCs) to offset up to 5% of their taxable emissions. This measure aims to ease the impact on companies that can efficiently source eligible carbon credits, stimulate local demand for high-quality credits, and foster the development of effective and regulated carbon markets. The ICCs used under the carbon tax regime must comply with Article 6 of the Paris Agreement and adhere to seven principles that ensure high environmental integrity.
Malaysia
Bursa Carbon Exchange (BCX), the world's inaugural Shariah-compliant carbon exchange, was established in December 2022 to enhance transparency and enable businesses to procure carbon credits for offsetting greenhouse gas emissions. The upcoming auction follows BCX's successful completion of its maiden carbon credit auction in March of the previous year.
On May 2024, Malaysia's voluntary carbon market exchange announced plans to conduct its inaugural auction of Malaysian carbon credits on July 25th 2024, according to Bursa Malaysia, the stock exchange operator. The auction, facilitated by the (BCX), will feature carbon credits from the Kuamut Rainforest Conservation Project. This project focuses on safeguarding and restoring approximately 83,381 hectares of tropical forest in Sabah's Tongod and Kinabatangan districts.
This auction marks a significant expansion for BCX, as it introduces its first Malaysia nature-based carbon credits derived from a domestic forestry initiative. It represents a strategic move to diversify its product range, encompassing local carbon credits alongside global ones, as outlined by the exchange.
Muhamad Umar Swift, CEO of Bursa Malaysia, emphasized the importance of this development within Malaysia's climate agenda. He noted that the availability of carbon credits from the Kuamut Project underscores Malaysia's commitment to environmental stewardship and climate action, positioning the country as a leader in this regard.
Taiwan
The Taiwan Carbon Solution Exchange (TCX), which officially launched in August 2023 and the trading of international carbon credits commenced in Taiwan on December 2023, with 27 companies, including major players like Taiwan Semiconductor Manufacturing Co. (TSMC), Foxconn Technology Co., and Chimei Corp., collectively acquiring nearly 90,000 metric tons of carbon dioxide emissions
The Taiwan Stock Exchange (TWSE) and the Taiwan Carbon Solution Exchange (TCX) each signed memorandums of understanding (MOU) with the Eswatini Stock Exchange (ESE) in Taipei in March 2024. TCX CEO Joshua Tien said at the signing ceremony that the carbon-related MOU will link the two carbon credit markets, with carbon credits based on Eswatini's abundant natural resources likely to be traded on the TCX.
Eswatini's carbon credits, which most likely will be "green and yellow carbon [credits]," will be able to be traded on the TCX after being certified by international institutions and reviewed by Taiwan's Ministry of Environment, Tien said. Green carbon credits are from natural carbon sinks found on land, mainly forests, while yellow carbon is soil carbon that can be stored in soils by changing to organic farming practices, according to Tien.
The initiatives undertaken by Singapore, Malaysia, and Taiwan showcase the diverse approaches countries in East and Southeast Asia are adopting to develop their carbon markets. These efforts, though distinct, paint a promising picture for the future of carbon trading in the region, paving the way for a more sustainable and environmentally conscious future. Empower your carbon market strategy with the latest insights from Asia. Contact us to learn more.
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References:
https://verra.org/verras-methodologies-to-be-used-in-indias-push-to-engage-farmers-in-the-voluntary-carbon-market/#:~:text=The%20framework%20aims%20to%20promote,in%20India's%20food%20production%20system.
https://www.nccs.gov.sg/singapores-climate-action/mitigation-efforts/carbontax/#:~:text=To%20support%20our%20net%20zero,tCO2e%20by%202030.
https://focustaiwan.tw/business/202403050014#:~:text=The%20signing%20of%20the%20MOUs,TWSE%20said%20in%20a%20statement.
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