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The Rise of Carbon Exchanges in Asia

Updated: Mar 12

Writer: Albert SUTANTO, Krishnan SRINIVASAN,

Social Media Team: George K. KIONGSON


The growing consciousness about the environment and the imperative to devise effective strategies against climate change have led to the establishment of carbon exchanges in Asia. While these exchanges were historically more prevalent in Western economies, they are now gaining prominence in Asia, signaling the region's dedication to tackling environmental challenges and actively contributing to global endeavors in reducing carbon footprints.

 

Carbon exchanges serve as specialized markets tailored to facilitate the trading of carbon credits, operating in both compliance and voluntary markets. They have become indispensable tools for countries aspiring to achieve carbon neutrality and fulfill their commitments to achieving net-zero emissions. Notably, several Asian nations, including Japan, Taiwan, Malaysia, and Indonesia, have recently launched carbon exchanges, marking a significant step in their collective journey toward environmental sustainability.


Figure 1. Stock Exchanges

Japan[1]

On October 11, 2023, Japan's Tokyo Stock Exchange (TSE) commenced its trading of carbon credits. Yasutoshi Nishimura, the Trade Minister of Japan, noted a significant shift in the approach, stating that "Japan's industry ministry has been cautious about implementing emissions trading, but we have made a major turn to utilize the carbon credit market to achieve our carbon-neutral goal."

 

Within the TSE framework, members have the opportunity to engage in the trading of existing J-Credits, which constitute a domestic carbon crediting mechanism primarily traded among individual companies.

 

The volume amounted to 3,689 metric tons of CO2 on the inaugural day. The transaction prices for J-Credit on energy-saving stood at 2,850 yen per ton-CO2, while for J-Credit on forest, they were at 9,900 yen in the morning session and 7,000 yen in the afternoon.

 

Taiwan[2], [3]

On August 7, 2023, President Tsai Ying-Wen formally inaugurated the Taiwan Carbon Solution Exchange (TCX), committing to supporting local businesses in transforming the hurdles of achieving net-zero carbon emissions into viable business prospects. President Tsai emphasized that the exchange would streamline carbon credit trading and incentivize enterprises to decrease their carbon footprint. She highlighted how these trading mechanisms would stimulate the advancement of low-carbon technology research and development, bolster personnel training aligned with net-zero objectives, and foster a positive cycle for Taiwan's green economy.

 

Trading activities commenced on December 22, 2023, at TCX, totaling 88,520 metric tons of international carbon credits sold, amounting to a value exceeding US$80,000. Notably, the initial sale exclusively involved international carbon credits, as regulations related to domestic carbon emission reduction fees are yet to be finalized by the Ministry of Environment (MOENV). These regulations are expected to be presented in the first quarter of 2024.

 

Malaysia[4],[5],[6]

Bursa Carbon Exchange (BCX), the newly introduced carbon trading platform by Bursa Malaysia, concluded its inaugural pilot carbon credit auction, with domestic buyers acquiring the entire inventory of Verra-registered carbon credits. The electronic auction, held on March 16, 2023, witnessed the participation of 15 entities from various industries, collectively procuring 150,000 credits.

 

The official launch of Bursa Malaysia's carbon credits trading platform on September 25, 2023, demonstrated promising signs of success. Participants from diverse sectors, including notable entities such as Vitol Asia and CIMB Bank, actively engaged in trading activities. Ten companies completed transactions involving 16,500 Verra-registered carbon credits on the exchange in the initial two days of trading. With its successful operations, BCX is expanding its product offerings, intending to incorporate Renewable Energy Certificates (RECs) into its trading platform.

 

Indonesia[7]

On September 26, 2023, President Joko Widodo of Indonesia introduced the nation's inaugural carbon emission credit trading system, intending to establish a market that funds reductions in greenhouse gas emissions and positions Indonesia as a significant player in the global carbon trade. The opening session saw the trading of thirteen carbon credits, representing nearly 460,000 metric tonnes of carbon dioxide equivalent from projects by PT Pertamina Geothermal Energy in North Sulawesi. These credits were priced at 69,600 rupiah ($4.51) per tonne, as the trading board at the Indonesia Stock Exchange reported, which facilitated the transactions. Key buyers included major Indonesian banks such as Bank Central Asia and Bank Mandiri, various units of the state energy firm Pertamina, and companies in the mining sector.

 

In its initial phase, the trading will be entirely voluntary, although the government is actively developing mandatory measures such as a carbon tax and an emission trading system (ETS), which have been in effect for coal power plants since February.


Figure 2. Carbon Emissions

To conclude, the emergence of carbon exchanges in Asia reflects a dynamic shift in the region's approach to environmental sustainability. By embracing these platforms, Asian countries are fostering economic incentives for businesses and actively participating in the global movement towards a more sustainable and environmentally conscious future.


For further assistance in navigating the Carbon Market, don’t hesitate to contact Mt.Stonegate, as we lead to a better future. We offer comprehensive one-stop solution services and hold a prominent position in the Asian market.


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