Asia-Pacific carbon trade spreads

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Carbon finance & emissions trading

Monday, 27 August 2007

Trade in voluntary greenhouse emission reduction credits is spreading with new exchange-based initiatives in Singapore, Australia and New Zealand.

In Singapore, the Asia Carbon Exchange has extended its auctioning activity to Verified Emissions Reduction (VER) credits in the voluntary market after moderate success with auctions of Kyoto CERs generated in the region earlier this year. ACX-change successfully transacted 100,000 VERs at €3.76 ($US5) in an auction held in early August. The VERs came from four small-scale renewable energy projects in India and "purchased by a well-known European entity".

Carbon market observers should not confuse the Singapore-based ACX-change with the ACX, the Australian Climate Exchange, which launched in Melbourne in late July. ACX is servicing the VER market as well as NGACs, the emissions reduction certificates of the New South Wales mandatory state Greenhouse Gas Abatement Scheme. ACX is also eyeing a future mandatory national emissions trading scheme set for 2011-12.

Initial trade in the voluntary market has seen 5000 tonnes of carbon offsets, accredited under federal government’s Greenhouse Friendly programme, exchanged so far, last trading at $A8.70 ($US7) per tonne. ACX chief executive Tim Hanlin says quality offsets are in short supply with landfill gas projects producing the most voluntary and mandatory credits.

Across the Tasman Sea, the New Zealand Carbon Exchange (NZCX) remains tight-lipped over trading volumes and prices since launching in April. The NZ government is moving cautiously towards an emissions trading scheme and looking for ways to devolve some of the country’s mounting Kyoto deficit onto the private sector.

NZCX’s Stuart Frazer says this has seen an earlier focus on the voluntary market shifting towards Kyoto carbon credits as larger industrial players ready themselves for a mandatory carbon trading regime, to be internationally linked. The domestic Projects to Reduce Emissions (PRE) scheme is largely Kyoto-compliant, producing credits that can be used as ERUs under JI. Supply of credits is also said to be constrained.