Malaysia’s Bursa Carbon Exchange completed the nation’s inaugural carbon credit auction on 16 March 2023.
- The successful auction saw projects offered under Global Technology-Based Carbon Contract (GTC) and Global Nature-Based Plus Carbon Contract (GNC+).
- Some 150,000 Verra Certified Units (VCUs) were cleared with oversubscription of GTC Contracts.
- The initiative garnered interest from 15 local buyers with strong representation from the financial sector.
The auction, which was carried out electronically, saw encouraging participation with 15 buyers from various industries purchasing a total of 150,000 Verra-registered carbon credits.
The projects from which the credits were generated were intended to encourage local interest in similar carbon-offsetting project development. Datuk Muhamad Umar Swift added: “We welcome the Government’s commitment of the RM10 million seed funding incentive for Malaysian-generated carbon credits to be traded on BCX. We look forward to working with relevant stakeholders to facilitate the development of a vibrant VCM ecosystem.”
What is the Bursa Carbon Exchange?
The Bursa Carbon Exchange is the world’s first Shariah-compliant carbon exchange. It enables the trading of standardised contracts with underlying carbon credits from climate-friendly projects and solutions, which corporates can use to offset emission footprint and meet climate goals.
With this key milestone, the auction facilitated the price-discovery of carbon credits from two new products offered by the BCX: the GTC and the GNC+.
Among the successful bidders at the auction were AmBank (M) Berhad, AmBank Islamic Berhad, AmInvestment Bank Berhad, CIMB Bank, Malayan Banking Berhad, and Telekom Malaysia.
Bursa auction drove carbon price discovery
The GTC Contracts featured carbon credits from the Linshu Biogas Recovery and Power Generation Project in China. The project had benefits that align with the United Nations Sustainable Development Goals 7, namely of generating clean energy, 8, providing decent work, and 13, addressing climate change by reducing fugitive methane emission leakage to the atmosphere. The GTC Contracts were oversubscribed and cleared at RM18.50 per Contract.
The GNC+ Contracts featured carbon credits from the Southern Cardamom Project, which is a Reducing Emissions from Deforestation and Forest Degradation or REDD+ project from Cambodia that comes with a climate, community and biodiversity (CCB) standard that provides additional co-benefits, contributing to the livelihoods of local communities and biodiversity conservation in the Indo-Burma Biodiversity Hotspot. This GNC+ Contract fetched a clearing price of RM68.00 per contract at the auction.
To ensure proper governance during price discovery, Bursa Malaysia did not participate in the bidding process but purchased carbon credits only at the auction clearing price. The carbon credits from both projects, were supplied by Vitol Asia Pte Ltd.
By establishing a market-based price for carbon credits, the auction provides a clear signal to potential project proponents and developers on the economic viability of carbon credits. This will incentivise local project owners to develop carbon credit projects that can make a real impact in the fight against climate change.
“We are very pleased with the successful execution of this inaugural auction, which has
raised the awareness level of VCM and carbon offsetting opportunities in the country. We now have a proven market mechanism which provides price discovery,” said
Datuk Muhamad Umar Swift, chief executive officer of Bursa Malaysia. “This is a significant step towards unlocking Malaysia’s potential as a supplier of high-quality carbon credits”.
