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  Business Times 20 Sep 07
Promoting sustainable development
Asia Carbon Group helps cut emission of greenhouse gases

Business Times 20 Sep 07
PowerSeraya to explore carbon trading opportunities

Business Times 20 Sep 07
Singapore seen as carbon trading hub

IE Singapore's Kathy Lai tells CHUANG PECK MING about the competitive advantages the republic enjoys in this new role

SINGAPORE wants a piece of the growing multibillion-dollar pie that is the market for carbon trading, as some 189 countries under the Kyoto Protocol rush to meet their targets to reduce greenhouse gas emissions by 2012.

'There is scope for Singapore to be the Asian carbon trading hub,' says Kathy Lai, assistant chief executive of International Enterprise (IE) Singapore, the government's trade promotion arm.

According to Natsource, the certified emission reduction (CER) market was estimated to be worth US$5.4 billion last year. The volume weighted average CER price was US$11.10 per tonne of carbon dioxide equivalent.

CERs are carbon credits earned by energy-efficient and environmentally friendly enterprises which can be sold in the market to less efficient and pollution-prone businesses to meet their targets for emission reduction. CERs are provided by the Kyoto Protocol, which comes under the ambit of the United Nations and came into force in 2005.

To meet its goal of reducing emissions of greenhouse gases, mitigating climate change and saving the environment, the Kyoto Protocol commits industrial nations, classified as Annex 1 countries, to cut their greenhouse gas emissions by an average of 2.5 per cent from 2008 to 2012, using 1990 as the baseline. Non-Annex 1 signatories like China, India and Singapore have no targets.

CERs have also become a tradable instrument with a transparent price that attracted financial investors.

So the market for carbon trading is tipped to grow substantially with banks, brokers, funds, arbitrageurs and private traders eventually getting into the game.

Emissions Trading plc, for instance, was floated on the London Stock Exchange's Alternative Investment Market in 2005 with the specific remit of investing in emissions instruments.

Annex 1 countries' demand is estimated at 275 million to 880 million CERs yearly, according to the UN Framework Convention on Climate Change (UNFCCC) forecasts. And IE Singapore's Ms Lai points out that Asia has the potential to become a major supplier of CERs to the Annex 1 countries.

'As of June 2007, 708 clean development mechanism (CDM) projects have been registered with the UNFCCC CDM executive board,' she says. 'India has the largest number of registered CDM projects, while China is expected to be the largest producer of CERs by 2012. More than half of the CDM projects are from the energy, waste handling and disposal industries.'

With the Kyoto Protocol coming into force for Singapore in July last year, CDM projects here will be eligible for carbon credits.

But Ms Lai says given its size, Singapore does not have much room for CDM projects. Still, Singapore has what it takes to be an Asian carbon hub - and Ms Lai lists many competitive advantages it enjoys in this role.

According to her, Singapore is located near and has easy access to CDM projects and is the main source of CERs. It is already a top Asian financial and oil trading hub, which offers complementary infrastructure to carbon trading.

What's more, Ms Lai says the government here backs research and development in environment and clean energy which will have technological spin-offs for CDM projects.

In pushing Singapore to become a centre for carbon trading, she says there is a need to attract a critical mass of market makers to introduce liquidity.

'From industry feedback, it was agreed by the banks and traders that it is important to have supporting services such as investment banking, custodian services, carbon finance and verifiers for projects to qualify for the CDM projects,' Ms Lai says. 'The legal structure and accounting expertise are also key ingredients for the development of a carbon trading hub in Singapore.'

The Ministry of Trade and Industry, IE Singapore, the Economic Development Board and the Monetary Authority of Singapore are already pooling efforts to build up this critical mass.

IE Singapore is extending tax holidays under the Global Trade Programme (GTP) as carrot for carbon trading firms to set up here.

'To encourage emissions trading through Singapore, such trades are considered as a qualifying product under the GTP as of May 2007,' Ms Lai says. 'Companies will enjoy preferential tax rate, subject to the GTP qualifying criteria of physical offshore trade, total local business spending, and number of traders.'

IE Singapore is also working with the UK Trade and Investment Agency and the American Chambers of Commerce to publicise and raise awareness in the global carbon community. It is similarly enlisting the help of banks and financial institutions like ABN-Amro, Citigroup and Fortis to inform the world of Singapore's interest in building up its carbon trading cluster.

'The general feedback is that a larger and more stable market needs to grow in Asia before such institutions would consider transferring expertise to Singapore,' Ms Lai says.

The wait may not be too long as the Kyoto Protocol's 2012 deadline draws near.

Business Times 20 Sep 07
Promoting sustainable development
Asia Carbon Group helps cut emission of greenhouse gases

ASIA can be a catalyst in the global effort to reduce the emission of greenhouse gases that cause harmful climatic changes - and Asia Carbon Group (ACG) was set up in 2003 to help realise this role.

With its global headquarters now in Singapore, ACG's mission is 'to promote sustainable development by employing climate change mitigation measures in Asia and globally', according to Martha Fernandez, its senior manager for business development.

'The Singapore office is engaged primarily in carbon exchange and related activities and establishing carbon services in countries worldwide,' she says.

At present, ACG has a portfolio of more than 55 Clean Development Mechanism (CDM) projects worth about 15 million Certified Emission Reductions (CERs).

'ACG is fully committed to mitigate global climate change and initiate sustainable development through the application of the Kyoto Protocol's financial mechanisms, particularly the CDM, joint implementation and emissions trading,' says Ms Fernandez.

'ACG is a one-stop carbon solutions shop to help the public and private sectors optimise returns from clean energy projects that reduce greenhouse gas emissions.' Its integrated services include carbon advice, carbon finance and carbon trading - designed to help clients align their strategies to take advantage of any opportunity in the CDM.

ACG has a total of about 40 staff in Singapore, Malaysia, India, Indonesia, Vietnam, Myanmar, Pakistan and the Netherlands.

Because Singapore did not ratify the Kyoto Protocol - which sets binding commitments on signatory countries in the developed world to reduce emissions - until 2006, ACG was initially based in the Netherlands to gain access to Annex 1 (industrialised) carbon markets.

But it did set up a regional office here to reach out to non-Annex 1 (developing) countries, and expanded its presence to Malaysia, Vietnam, Indonesia, Sri Lanka, Pakistan, the Middle East, Australia, India and China.

Why did ACG eventually base itself in Singapore?

'Strong political stability, transparent government policies and support to the private sector, excellent trading and finance expertise, an ideal location in Asia in terms of access to various countries, excellent infrastructure and facilities,' says Ms Fernandez. 'All these were prime considerations.'

The Singapore government's emphasis on clean energy and clean technologies has done much to raise regional awareness about climate change and CDM opportunities for Singapore companies, she says.

'With this we are now seeing movement in the local market, with a growing interest as to how participation in CDM could be effected.' Ms Fernandez says that ACX-Change - the world's first CDM-focused carbon exchange platform - is already operating from Singapore.

'And so far it has facilitated a total of 3.4 million CERs between European and Japanese buyers (on one the hand) and Asian CDM sellers (on the other, translating to a liquidity equivalent of almost 27 million euros (S$56.8 million).'

ACG has a team of 12 staff in Singapore working closely with ACX-Change, Asia Carbon Registry and Project Management Services Group.

'CDM advisory services are usually provided to companies in Singapore and the Asean region as they consider participating in the CDM, generating or acquiring CERs for their projects,' says Ms Fernadez. ACG's major challenge has been to convince the private sector in Singapore and the rest of Asia in 2003 that the Kyoto Protocol will be ratified in the evolving carbon market.

But growth in the number of companies covering the entire spectrum of the carbon market has emboldened ACG to differentiate itself in terms of the products it offers.

'The space itself is not without detractors,' says Ms Fernandez. 'There are those who are dismayed by the sheer number of carbon companies that are out to cash in on the lucrative CERs market without actually effecting the requisite actual reduction in carbon emissions.' ACG takes pains to ensure it delivers on its promises,' she says.

'The carbon market is here to stay and the role of the public and private sectors is key. ACG will continue to involve itself in participating and facilitating climate change mitigation policies. ACG will not only address the project-based emission reductions but will ensure deployment of sustainable development goals in projects it is involved in.'

Business Times 20 Sep 07
PowerSeraya to explore carbon trading opportunities

POWERSERAYA, owned by Temasek, is going into carbon trading in a move to become a fully fledged integrated energy company. But it's still early days for the company, which is in the business of producing, wholesaling, trading and retailing energy, focusing mainly on electricity.

'PowerSeraya recognises that climate change is a serious issue and is taking a number of steps to reduce its carbon footprint by a further 10 per cent (beyond the 30 per cent reduction achieved over the past 10 years) by 2010,' says Neil McGregor, the company's managing director.

'As such, PowerSeraya is keen to explore opportunities in trading carbon credits that could result from the announced development of a new low carbon 800MW co-generation plant to replace an equivalent amount of less efficient and higher carbon-emitting steam technology,' he says.

PowerSeraya is applying for these carbon credits under the Kyoto Protocol's Clean Development Mechanism (CDM).

'When the carbon credits are approved and assigned under the CDM to the company, they will be available for trading in the future,' says Mr McGregor. 'At that time, we will look to whichever mechanism or exchange is 'available' that will provide PowerSeraya the best value.'

Costing about $800 million, the 800MW natural gas-fired co-generation plant will replace three oil-fired units located at PowerSeraya's energy hub with a highly efficient co-generation combined cycle plant (co-gen ccp) which will produce electricity and steam at the same time.

Siemens and its consortium partner Samsung Corporation will build this twin-unit co-gen, which is due to be completed by 2009-10.
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