The inaugural carbon credit auction held by Bursa Carbon Exchange (BCX) on March 16, 2023, is a significant achievement in Malaysia’s transition towards a low-carbon economy. The auction, which saw 15 buyers from various industries purchase a total of 150,000 Verified Carbon Standard (Verra)-registered carbon credits, demonstrates the growing interest in the voluntary carbon market (VCM) in Malaysia.
Moreover, the auction introduced two new products offered by BCX - the Global Technology-Based Carbon Contract (GTC) and the Global Nature-Based Plus Carbon Contract (GNC+) - resulting in the price discovery of carbon credits. The GTC featuring carbon credits from China's Linshu Biogas Recovery and Power Generation Project, aligned with the Sustainable Development Goals (SDGs), was oversubscribed and cleared at RM18.50 per contract. GNC+, on the other hand, was cleared at a higher price of RM68 per contract. It features carbon credits from Cambodia’s Southern Cardamom Project, which is a Reducing Emissions from Deforestation and Forest Degradation (REDD+) project that comes with Climate, Community and Biodiversity Standards (CCB). The auction drew strong interest and a healthy price signal from the domestic corporate sector, particularly government-linked companies and financial institutions.
Establishing a market-based price for carbon credits is crucial in motivating local project owners to work on carbon credit projects that can genuinely contribute to the fight against climate change. The success of the auction helps to increase awareness of the VCM and carbon offsetting possibilities in the country. Moreover, the auction gives a clear indication to potential project proponents and developers on the economic viability of carbon credits.
It is commendable that the government has committed RM10 million seed funding incentive for Malaysian-generated carbon credits to be traded on BCX. This initiative will encourage companies to participate in the BCX and facilitate the development of a vibrant VCM ecosystem, which will help Malaysia achieve its climate goals and reduce its carbon footprint.
In conclusion, the success of the inaugural carbon credit auction is an essential milestone for Malaysia's VCM, signalling the country's commitment towards sustainability and climate action. The auction provides an opportunity for businesses to offset their carbon footprint while supporting climate-friendly projects and solutions. We look forward to the development of a vibrant VCM ecosystem in Malaysia, bringing more companies and individuals into the fight against climate change.
Source: https://www.theedgemarkets.com/node/659597
