Singapore to lay the groundwork for a regional carbon credit market

Ravi Menon said there was a need for more high-quality carbon credits and more trading of those credits across borders to drive convergence towards a global carbon price.

An Asian carbon credit market must be part of the strategy to achieve both development and sustainability in the region, Chief Executive Officer of MAS (Monetary Authority of Singapore), Ravi Menon, announced at SFF x SWITCH Tuesday (December 8).

“Global demand for voluntary carbon credits is expected to increase 10-fold over the next 10 years, from 100 million tonnes of CO2 equivalent in 2019 to over 1 billion tonnes in 2030,” Menon said. “But today, carbon credit markets are fragmented, liquidity is thin and carbon prices vary from market to market. We need global coordination to develop voluntary carbon credit markets.

According to Menon, more high-quality carbon credits and more cross-border trading of these credits are needed to foster convergence towards a global carbon price. This will involve putting in place infrastructure and data connectivity to ensure environmental integrity and avoid double counting of credits.

A private sector-led coalition in Singapore, the Sustainability Alliance for Action, has proposed developing a market ecosystem for voluntary carbon credits. “Such an ecosystem can facilitate price discovery, improve liquidity and verify the integrity of carbon credits,” Menon said.

He said the Alliance was working to solve the problems posed by the voluntary carbon credit market, including through prototyping technology using artificial intelligence to extract key data from lengthy project documents and in more accessible and comparable formats. The standardized information can then be used by market participants to assess the value of projects and better price them, Menon said.

The Alliance is also testing the use of remote sensing technology combined with satellites to more accurately verify carbon sequestration, which Menon says is “important to ensure that credits issued by a project represent real, measurable reductions.” shows”.

The Alliance will focus on carbon credits generated by “nature-based solutions”, climate change mitigation technologies that harness natural processes to reduce or remove greenhouse gases.

In a new report launched on the same day, DBS Bank, Temasek, NUS (National University of Singapore) and Conservation International highlighted opportunities for companies to invest in nature-based solutions to drive large-scale implementation and to drive transitional changes for entire sectors.

Additionally, Temasek and DBS are leading a six-month technology accelerator for start-ups interested in using technology to scale nature-based solutions, with NUS, the World Bank and Google as partners.

Menon said Singapore wants to work with like-minded countries and companies to test the recommendations of the IIR-sponsored task force for scaling up voluntary carbon markets and to “start laying the groundwork.” of a viable carbon credit market in Asia”.

Green Finance Action Plan

Menon also spoke about initiatives under the MAS Green Finance Action Plan, launched at last year’s Fintech Festival. This includes finalization environmental risk management guidelines for banks, asset managers and insurers in Singapore.

MAS also encourages the development of green financial products and solutions, by award grants to offset certification costs associated with issuing green and sustainability-related bonds and loans.

It also promotes climate risk insurance solutions, attracts green funds and sustainability-focused asset managers, and anchors sustainability rating and verification service providers in Singapore.

In addition, MAS works to build knowledge and capacity in sustainable finance, including through the recent launch of the Singapore Green Finance Centre, the first research and talent development institute focused on green finance.

Menon also announced the launch of a new project – Project Greenprint – which will be a technology platform to promote a green financial ecosystem.

The Greenprint project will mobilize capital towards SMEs and fintechs working on green and sustainable projects, monitor whether projects meet their commitments and measure the impact generated by investments and loans on these projects.

“We will establish a consortium of financial institutions, FinTech companies and industry players with expertise in Green FinTech to drive the Greenprint project,” Menon said.