‘Complex’ APAC region needs to collaborate for an effective carbon market

The global carbon market could reach $10b to $40b by 2030.

Asia Pacific’s voluntary carbon market is on the rise, but with the region's complexity, economies need to work together to implement a successful carbon market, Peter Rawlings, Global Industry Lead, Finance Sector, ERM, said. 

In the region, various markets such as China, Korea, New Zealand, Singapore and Japan are imposing some form of mechanism that promotes carbon reduction either through trading schemes or tax policies. 

Globally, there are around 68 countries with carbon trading schemes, with the carbon market reaching $2b in 2021. It could potentially increase to between $10b and $40b by 2030, driven by the markets’ compliance with various climate commitments such as the Paris Agreement.

“[I]t’s still early days but it is growing rapidly and has a very strong role to play,” Rawlings told Asian Power.

Whilst the market is thriving, some countries have yet to succeed in their performance on carbon credits. Its mobilisation will deeply depend on the role and the scale that each country has achieved. 

Markets like Singapore and China could implement strong practices in carbon credits, due to their economic standing, emerging innovations, and governmental scope. China, in particular, will play a crucial role due to its geographical size and global influence.

To gauge the carbon credit market, it will take collaboration between countries, given the complexity of the region. For one, each market has differing levels of energy sector maturity. Power infrastructures vary across the region with some coal-fired stations that are only between five to 10 years old. 

“There's a cost to that and we have to figure out the mechanisms. We need consistency and alignment; and at the moment that doesn't exist,” Rawlings said. 

“You have varying policies, varying approaches, and that is limiting that kind of intercompany region-wide collaboration,” he added.