Singapore market for carbon trade growing

Singapore’s carbon market is growing and new firms are setting up shop here on the back of increased interest in carbon trading in Asia.

Ministry of Finance Permanent Secretary Chan Lai Fung said yesterday Singapore’s position as a major international financial centre has attracted key players such as Tricorona and Gazprom, which are the world’s leading traders of carbon.

Today, there are about 30 carbon trading companies in Singapore, up from just a few a couple of years ago.

The global carbon trading market has been growing rapidly in recent years and is estimated to increase in value from about €90 billion (S$163 billion) in 2008 to nearly €1.2 trillion by 2020.

In Singapore, the Government supports the industry by providing grants to firms. The grants help defray the cost of developing the documentation needed for carbon credit projects that are certified by the United Nations under its Clean Development Mechanism (CDM) scheme.

In November 2008, Singapore registered its first CDM project, which involves the recovery of waste steam from a biomass cogeneration plant for the drying of waste. Currently, there are seven other CDM projects that have been submitted for validation, revealed Ms Chan.

‘Although the number of projects may not be large, they represent the industry’s commitment in support of the CDM initiative,’ she said.

To encourage carbon trading here, Singapore enhanced its scope of tax incentives last year to include such activities.

‘It reflects our confidence in the continued growth of the carbon trading market, and our belief that Singapore is well placed to leverage on this growth,’ said Ms Chan, who was speaking at Carbon Forum Asia, organised by the International Emissions Trading Association (IETA) and German firm Koelnmesse.

IETA chief executive Henry Derwent said Singapore ‘has been understandably cautious about carbon markets (in the past)… but that is giving way to an understanding that in the medium term this has growth potential’.

Mr Derwent said he does not have hope that next month’s climate change meeting in Mexico will produce a global treaty that places a certain price on carbon. ‘But carbon markets will be as much shaped by other markets and global voluntary markets,’ he said.

It does not need a global climate treaty to function although that would add more certainty for the industry, he added.

BNP Paribas director of its carbon origination Asia unit Jean-Christophe Bougle, who attended the conference, said the industry is generally confident there will be a strong carbon market even beyond 2012, when the current trading framework under the Kyoto Protocol expires.

The market could transition into regional or domestic markets, he said. For example, New Zealand has set up its own carbon trading system, and countries like Japan and South Korea are in the process of doing so, which could promote trading in the Asia-Pacific region.

Carbon Forum Asia is one of the first events to kick off as part of Singapore International Energy Week, which began yesterday and ends on Nov 4. It brings together policymakers and businesses from a wide range of countries to discuss energy-related issues.

Source: The Straits Times

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