Calls for more companies to participate in BCX

KUALA LUMPUR: Bursa Malaysia and the government are urging more participation of corporates in the Bursa Carbon Exchange (BCX), encouraging a collective effort to amplify BCX’s positive influence on sustainability.

The local exchange’s chief executive officer Datuk Muhamad Umar Swift said the BCX, which officially went live on Sept 25, marked a noteworthy achievement with 16,500 units of carbon credits traded by 10 companies within the first two days of trading.

However, Muhamad Umar emphasised that the advancement of the voluntary carbon market (VCM) relied heavily on early participation from Malaysian corporates.

While Bursa Malaysia recognises that increasing the number of BCX participants and liquidity on BCX will take some time, Muhamad Umar said the country had no shortage of potential in carbon project prospects that are capable of creating valuable carbon credits.

“However, there needs to be stronger participation from state governments and Corporate Malaysia from today for this to happen and for the BCX to truly move the needle,” he said during the launch of the national VCM handbook at the BCX’s inaugural Malaysia Carbon Market Forum 2023, held in conjunction with the International Greentech and Eco Products Exhibition and Conference Malaysia 2023 or iGEM 2023.

The national VCM handbook is aimed at guiding local professionals and stakeholders in generating carbon credits that adhered to international standards recognised by BCX.

It provides guidance on the VCM mechanism in the country at the national and state levels, the type of carbon projects applicable as well as the way to formulate a VCM project.

Muhamad Umar believes the VCM handbook is a relevant guide designed to assist entities keen on participating in carbon market project development and the voluntary carbon market, as the nation shifts towards becoming a lower carbon economy,

He said the handbook defined the roles and functions of key entities in Malaysia’s carbon market operations, serving as a reference point for market players.

The VCM handbook was developed in consultation with the Natural Resources, Environment and Climate Change Ministry (NRECC) and various ecosystem participants.

Muhamad Umar also shared that one of Malaysia’s nature-based projects, the Kuamut Rainforest Conservation Project in Sabah, is nearing its first issuance.

“Soon enough (we hope), our carbon ‘supermarket shelves’ will be stocked with Malaysian products,” he said.

NRECC minister Nik Nazmi Nik Ahmad said Bursa Malaysia was getting ready to auction carbon credits from the Kuamut Rainforest Conservation Project.

This project aims to protect and restore 83,381ha of tropical rainforest, translating to an estimated annual emissions reduction of 543,049 tonnes of carbon dioxide equivalent.

The auction date will be announced once Verra, recognised as the world’s foremost standards setter for climate action and sustainable development, has issued Kuamut’s carbon credits.

“This project is commendable as it is being verified for a triple gold labelling under Verra’s co-benefit standard of climate, community and biodiversity,” he said.

Nik Nazmi also said the government needs nature-based solutions (NBS), which can provide up to 30% of the mitigation required by 2030 to keep the 1.5 degrees Celsius target in reach.

He believes that the VCM would help mobilise public sector finance towards NBS, particularly in the global south where it is most urgently needed.

He said many state governments had reached out to his ministry for alignment of carbon policies for forest carbon assets, adding that the NRECC was doing its best to ensure that these discussions took place.

“I wish to also reiterate that our National Carbon Policy is expected to be ready for implementation this year. It will provide, among other things, guidance on carbon trading at the state level,” he added.

Meanwhile, Muhamad Umar said the exchange acknowledged the imperative to upscale and expedite carbon projects.

Nevertheless, he noted that the local exchange has identified challenges in existing global carbon standard registries.

“Hence, there are ongoing conversations and efforts domestically, as well as for example in Indonesia, to develop local carbon credit standards that are consistent with global best practices,” he said.

Muhamad Umar said the exchange envisaged a not-too-distant future where there were local standards in the Asean region that were recognised among respective markets for high quality carbon credits.

“Perhaps there might even be an inter-operable Asean carbon registry, where it can facilitate both cross-border carbon trading and data linkages,” he added.