Singapore is starting work to demonstrate the possibility of trading carbon offsets, in the form of a marketplace of natural conservancy projects that companies can invest in to offset their carbon emissions.
What is Happening?
- A group of financial firms are launching the new marketplace platform in Singapore, called Climate Impact X, which will also function as an exchange where offset credits can be traded.
- For a project to be successful, it must prove that it is actually effective at sequestering carbon dioxide from the atmosphere instead of offering companies a cheap way to continue polluting.
Piyush Gupta, chief executive officer of DBS Group Holdings Ltd, said at a press conference, “There’s a degree of distrust in these markets as there’s a gray area around the verifiability of these projects. On the other side, the opportunity is very real too. This is going to be a huge multi-billion dollars opportunity.”
You might also like: How Forest Restoration Can Reduce the Threat of Wildfires
- The planners of the carbon offsets platform in Singapore hope to launch it by the end of 2021.
- However, climate experts argue that offsets should only be used as a last resort. For example, if a company is unable to reduce their emissions with existing technology, it can simply pay to reduce someone else’s or fund a project that sucks up greenhouse gases from the atmosphere. Without the right regulations, a carbon offset exchange could enable companies to simply buy their way to net-zero emissions instead of changing their activity to reduce emissions. Further, it can be difficult to prove that these projects are legitimate.
- To get around this problem, Climate Impact X plans to use satellites, artificial intelligence and blockchain technology to verify the legitimacy of projects. It will also be guided by an independent international advisory council that will include NGOs, multinational companies, business groups and academics.
Monetary Authority of Singapore Managing Director Ravi Menon said that if the platform is successful, it will prove the concept of using market forces to direct money from companies that want to reduce their climate impact toward worthwhile projects.