Singapore to Lay Foundation for Regional Carbon Credits Market

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

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

“Global demand for voluntary carbon credits is expected to grow 10 times 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 across markets. We need global coordination to scale up the voluntary carbon credits markets.”

According to Menon, there is a need for more high-quality carbon credits and more trading of such credits across borders to drive convergence towards a global price on carbon. 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 has been working to address problem statements in the voluntary carbon credit market, including through prototyping technology that use of artificial intelligence to extract key data from lengthy project documents and into more accessible and comparable formats. The standardised information can then be used by market participants to assess the value of projects and price them better, Menon said.

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

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

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

In addition, Temasek and DBS are leading a six-month Technology Accelerator for start-ups interested to use technology to scale nature-based solutions, with NUS, the World Bank and Google signing on as partners.

Menon said Singapore is keen to work with like-minded countries and businesses to test-bed recommendations from the IIF-sponsored Task Force for Scaling Voluntary Carbon Markets and to “start laying the foundations for a viable carbon credits market in Asia”.

Green Finance Action Plan

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

MAS is also encouraging the development of green financial products and solutions, by providing grants to offset the certification costs of issuing green and sustainability-linked bonds and loans.

It is also promoting insurance solutions for climate risks, attracting green funds and asset managers with a sustainability focus, and anchoring providers of sustainability rating and verification services in Singapore.

In addition, MAS is working to build knowledge and capabilities 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 aimed at promoting a green financial ecosystem.

Project Greenprint will mobilise capital towards SMEs and fintechs working on green and sustainable projects, monitor whether the projects are meeting their commitments, and measure the impact generated from investments and loans towards these projects.

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


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