Carbon markets are primarily “about international locations collaborating with one another to unlock emissions discount alternatives that might not have occurred in any other case,” mentioned Benedict Chia, director-general of local weather change on the republic’s Nationwide Local weather Change Secretariat (NCCS) on Thursday.
He was talking on a panel at Asia Carbon Summit, below the city-state’s flagship power occasion Singapore Worldwide Vitality Week.
“If a rustic doesn’t have a great understanding of how a lot it’s emitting to a stage of certainty, then the inspiration on which you’re constructing this collaboration goes to be flimsy,” mentioned Chia. “The opposite essential side is the nation must have a strong emissions goal, and it must have a transparent understanding of the way it’s going to get to the goal.”
The “crux of the problem which bedevils quite a lot of cooperation,” he mentioned, is that “international locations usually are not positive what they’ll correspondingly regulate for.”
A corresponding adjustment is a switch of emissions reductions throughout international locations’ greenhouse fuel inventories to forestall double counting. It’s required below Article 6 of the Paris Settlement, which outlines the framework for international locations to satisfy their nationwide local weather targets by way of buying and selling carbon credit.
Earlier this month, the UN carbon physique accepted an ordinary for venture methodologies and carbon removals to avoid the bureaucratic COP course of, which stunted the progress made on carbon crediting guidelines final 12 months, in an effort to operationalise Article 6.4 – a key mechanism that can allow companies to commerce credit linked to tasks that scale back emissions in different international locations.
“A few of the very early international locations that I spoke to had this mindset that ‘I’ll solely resolve whether or not I can promote you the credit score after I’m sure that I can meet my goal,’ which shall be in 2028 or 2029 – which, I believe, utterly defeats the aim of carbon markets,” mentioned Chia.
Singapore-based carbon buying and selling platform ACX chief govt Thomas McMahon, who spoke on a panel following Chia’s, mentioned that after COP26 in Glasgow, the extra well-defined Article 6 guidelines gave governments larger management over their carbon belongings, main some international locations like Indonesia and Papua New Guinea to impose moratoriums on carbon credit score issuances to judge how a lot rainforest offsets they had been producing and the quantity they should meet their nationally decided contributions (NDCs).
Each international locations are poised to raise their moratoriums by year-end. Within the meantime, Papua New Guinea has change into one of many two nations to enter right into a definitive settlement with Singapore to commerce carbon offsets below Article 6.2. However the republic continues to wrestle with discovering provide for eligible credit, which led it launch a brand new public-private alliance in July.
“Neither of these [host] international locations have produced carbon credit with corresponding changes hooked up to them. There’s nothing unsuitable with that, however no person anticipated that to occur. So it’s an issue within the provide chain and the accounting chain, in order that must be labored out,” McMahon mentioned.
Negotiations at COP29 are anticipated to make clear the circumstances below which a carbon venture host nation can revoke authorisations for country-to-country carbon buying and selling offers below Article 6.2, which is a threat to venture builders and purchaser international locations that Chia introduced up final month.
Driving standardisation in a decentralised market
Chia talked about that he sees additional room for standardisation within the voluntary carbon markets, past standardised contracts, which pool credit throughout a number of tasks that meet sure high quality necessities, with the intention of derisking them for traders.
“Take, for instances, your complete Article 6 course of by way of how models are generated, how they’re being transacted and the identifiers that associate with them. In case you look strictly at what has been agreed on the UNFCCC, it doesn’t go into all these particulars. It leaves quite a lot of flexibility for international locations and events to resolve amongst themselves what really works greatest,” mentioned Chia.
“Whereas that flexibility is nice. we predict that there’s worth in driving larger standardisation. So Singapore, along with Gold Commonplace and Verra, is placing collectively what’s referred to as an Article 6 playbook, which tries to drive larger standardisation, harmonisation and consistency in processes.”
Chia mentioned that the playbook was reviewed by some key international locations and non-governmental organisations at the Bonn Local weather Change Convention earlier this 12 months and that they’re planning on doing a “fuller research” on the upcoming COP.
He shared that NCSS can also be hoping to launch some work it has been doing alongside “one of many worldwide organisations” – which Chia didn’t identify – to give you “larger standardisation and authorisation types” that can assist insurers of carbon tasks higher perceive and scale back the dangers concerned at subsequent month’s local weather summit in Azerbaijan.
When requested about whether or not Asean ought to create its personal carbon customary, Chia mentioned that he sees worth in that, on condition that among the generic emissions components, methodologies and instruments to evaluate additionality from present requirements don’t apply to the distinctive challenges confronted within the area.
Nonetheless, it’s a extra open-ended query as to who’s best-placed to develop the usual, mentioned Chia.
“In case you get some organisation that’s based mostly in Asia driving it, it’s a plus. As to what this organisation is, to be fairly sincere, I don’t have a solution,” he mentioned.
Final August, a brand new Asia-based carbon requirements physique referred to as Asia Carbon Institute launched in Singapore and Hong Kong. Alongside two Thai companions, it pushed for a “impartial carbon customary” for Asean, although no additional particulars have been introduced for the reason that press launch.
In July, Malaysia additionally mooted a regional customary for carbon tasks, forward of its upcoming Asean chairmanship subsequent 12 months. The nation’s surroundings minister advised Eco-Enterprise then that he has commenced talks along with his Thailand counterpart with a view to creating an Asean carbon framework.
