This month saw an extensive schedule of events in Singapore that brought investors, climate advocates, and policymakers from all over. One trending topic – apart from the ‘road to Belem’ – was carbon trading.
In this edition, we also look at how much impact investing has delivered, and ask if clean energy is really so.
Making carbon credits count
Powerful and well-placed voices are pointing to the voluntary carbon market as a key solution to closing the climate financing gap. The voluntary carbon market “is a vital tool for financing decarbonisation,” asserted Singapore’s central banker-turned-climate action ambassador Ravi Menon.
Carbon credit trading can be traced back to 1997, at the signing of the Kyoto Protocol, or even earlier. But the industry has been hamstrung by the lack of clear regulation and standards, and plagued by scandal and scepticism. How will this time be different? And where are the opportunities for investors?
Menon was speaking early this month at Singapore’s GenZero climate summit, on a panel alongside the UK’s Special Representative for Climate, Rachel Kyte, and Tom Montag, the former COO at Bank of America Merrill Lynch who now heads Rubicon Carbon, the TPG Rise-backed carbon credits management company.
There is broad acknowledgment of the need for better data and standards. At the event, Menon spoke of addressing supply integrity, demand legitimacy, infrastructure efficiency, and regulatory clarity.
Despite the intellectual capacity, funding, and years that have been funneled into the industry, there is still a lack of coherent regulatory and governance standards to ensure fungibility, transparency, and accountability in the supply of carbon credits. The resultant high costs and risks of verification and transaction only exacerbate the lack of incentives and level of comfort needed to drive and sustain demand.
