OFFSETTING CARBON EMISSIONS IS CRITICAL TO ACHIEVING NET ZERO
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How regional collaboration could lift carbon trading in Southeast Asia
Carbon markets are an instrumental tool to assist countries in achieving GHG emissions reduction commitments. Emissions trading systems in smaller countries face the problem of insufficient market participants and investors which can result in volume and liquidity levels which are insufficient to determine market pricing effectively. To address this, some countries and regions have harmonised emissions trading systems, to create larger and more liquid carbon markets. In this insight, we consider potential opportunities for cooperation and harmonisation of carbon trading across Southeast Asia and the broader region.
Carbon trading is booming globally: what is it and how does it work?
OUR CARBON MARKET INSIGHTS
Insight
As Australia moves towards achieving net zero by 2050, the construction and real estate industries (and their regulators) are looking beyond emissions from the operation and maintenance of their assets but also looking at reducing carbon emissions embodied in building materials and generated by the construction of buildings.
27 September 2024
Insight
We talk a lot about global carbon trading markets – yet relatively little about the mechanism by which countries trade emissions reductions. That mechanism - Internationally Transferred Mitigation Outcomes (ITMOs) – is a strategic tool for nations to not only comply with their climate commitments but also to leverage their carbon sink resources effectively.
26 August 2024
Insight
What rights attach to a carbon credit? Who owns it? The legal nature of carbon credits sounds like a niche concept that only concerns lawyers, but it goes to fundamental aspects of trading and finance that have implications for businesses. And United Nations bodies are working to develop a comprehensive and coordinated legal framework for carbon credits.
26 April 2024
Insight
As Australia transitions to a low-carbon economy, we see carbon markets play an increasing role to help achieve net zero ambitions. Staying on top of deadlines and developments is essential.
26 March 2024
Featured Insight
The long-awaited renewal of the China Certified Emission Reductions (CCER) market is expected to drive trading activity, develop the market and spur innovation. This is a critical step towards China reaching its ‘30.60’ decarbonisation target: peak emissions by 2030 and carbon neutrality by 2060.
26 January 2024
Insight
In an unexpected turn of events, the Federal Government’s Nature Repair Market legislation – which had stalled in the Senate and recently been deferred until at least April 2024 – has now passed after the Government struck a last-minute deal with the Greens.
07 December 2023
Insight
In our country chapters, we look at initiatives to encourage the transition to a net zero economy – across emissions reduction targets, carbon markets, financing, transport, housing and buildings, and agriculture. Here is a brief snapshot. More detail and examples are in the country chapters.
24 November 2023
Insight
Among the largest economies in the world by GDP and a powerful member of the G20, the Republic of Korea has developed a strong industrial activity sector in recent decades.
24 November 2023
Insight
Japan is the third-largest economy in the world and among the world’s highest emitters. Home to approximately 126.5 mn people, Japan consists of several thousand islands most of which are covered by mountains and surrounded by steep shorelines. The topography limits renewable energy development and Japan’s susceptibility to natural disasters such as typhoons and earthquakes has impacted nuclear generation following the 2011 Fukushima Daiichi Power Plant accident. Triggered by the Great East Japan Earthquake, this event tipped Japan’s economy into recession. A little over a decade on, Japan’s economy is showing signs of recovery – and investors are circling.
24 November 2023
Insight
Indonesia is at a critical juncture in shaping its energy future. The archipelago nation faces the challenge of boosting energy supply by ensuring universal electricity access for its people by 2040, while cutting carbon emissions to reach its net zero target by 2060. This is happening against a backdrop of one of the fastest-growing economies globally. Indonesia has experienced rapid economic growth since the 1970s, reducing poverty levels across its population of almost 280 million. Now, climate change threatens its diverse ecosystem. Communities are vulnerable to flooding, rising sea levels and heatwaves.
24 November 2023
Insight
Vietnam is among the fastest growing markets in ASEAN. Strategically located in the centre of Southeast Asia, its GDP, foreign direct investment and middle-income population have all grown over the past decade. Vietnam’s share of annual global emissions is relatively small - approximately 0.88% in 2021 - for a population of almost 100 million, or roughly 1.2% of the world’s people. The country is severely affected by climate change. With 3,260 km long coastline, many low-lying cities and river delta regions, Vietnam ranks first in the world for exposure to flooding alongside Bangladesh. The World Bank estimates Vietnam lost around US$10 billion in 2020 due to climate impacts. Without appropriate adaption and mitigation measures, climate change could cost Vietnam around 12% to 14.5% of GDP annually by 2050 according to World Bank estimates.
24 November 2023
Insight
The Philippines is among the world’s most vulnerable countries to climate change. Increases in the frequency and intensity of typhoons, changes in rainfall patterns, rising sea levels and increasing temperatures all pose a serious threat to the archipelago nation’s ecosystems and its 100 million+ population. This makes poverty-reduction efforts even harder.
24 November 2023
Insight
The net zero transition presents significant opportunities for Singapore, with its export-oriented, innovation-hungry, open economy. Yet it also carries significant challenges. Singapore is managing water and food scarcity, and rising sea levels threaten the low-lying landmass.
23 November 2023
Insight
Carbon markets are an instrumental tool to assist countries in achieving GHG emissions reduction commitments. Emissions trading systems in smaller countries face the problem of insufficient market participants and investors which can result in volume and liquidity levels which are insufficient to determine market pricing effectively. To address this, some countries and regions have harmonised emissions trading systems, to create larger and more liquid carbon markets. In this insight, we consider potential opportunities for cooperation and harmonisation of carbon trading across Southeast Asia and the broader region.
18 August 2023
Insight
The Federal Government has reformed the Safeguard Mechanism to put Australia’s largest industrial emitters on a pathway to net zero by 2050.
08 August 2023
Featured Insight
China’s efforts to encourage businesses to cut emissions and improve carbon data transparency are critical to achieving a sustainable future. From the national emissions trading system expanding and opening to foreign investment, to carbon cutting incentives for individuals, there is a rising tide of carbon-related initiatives across China.
01 August 2023
Insight
In the latest insight from our Carbon Markets Series, we visit the regimes around the world that are driving change.
29 March 2023
Insight
The Safeguard Mechanism reforms are set to become law with some amendments, after the Federal Government struck a deal with the Greens to secure their support.
28 March 2023
Insight
When China’s national carbon market launched in 2021, it promised to act as a powerful tool in combatting climate change.
27 March 2023
Insight
Almost every year since 1995, nations (or ‘states’ as they’re officially known) that are signed up to the United Nations Framework Convention on Climate Change (UNFCCC) have met to check progress towards cutting greenhouse gas emissions (GHG) and negotiate any new developments. Carbon markets were a key feature of the most recent Conferences of the Parties (COP) – COP26 in Glasgow and COP27 in Egypt. Agreement on a carbon markets ‘rulebook’ – referred to as Article 6 by many, named for the section of the Paris Agreement containing the measures - was a critical step towards scaling carbon markets globally. That includes a central UN mechanism to govern carbon trading and on cooperation between nations. So what is Article 6, what was agreed, and what does it all mean?
21 March 2023
Insight
Green bonds have surged in use over the past two years, but the future growth and effectiveness of the market is threatened by difficulties confirming the credit quality of an issuer and ensuring proceeds are used to fund green projects.
21 March 2023
Insight
After an ambitious start to its term in office, the Federal Government is showing no signs of slowing down as it paves the way for significant environmental reform and a nature positive Australia.
09 March 2023
Insight
King & Wood Mallesons (Richard Mazzochi, Partner and Claire Potter, Registered Foreign Lawyer (England and Wales)) is delighted to have worked with the Global Financial Markets Association (GFMA) and other leading industry bodies in preparing the GFMA response to the public consultation published by the International Organization of Securities Commissions (IOSCO)[1] on recommendations for establishing sound Compliance Carbon Markets and on key considerations for enhancing the resilience and integrity of Voluntary Carbon Markets.
21 February 2023
Insight
We describe the development of carbon trading markets in Southeast Asia and anticipate the direction and prospects of further development of these markets in the foreseeable future.
16 February 2023
Featured Insight
The role of carbon markets is expected to increase rapidly in the coming years as nations continue to focus on sustainable economic development and drive towards a net zero economy. Understanding how they work and the role they can play is critical.
13 February 2023
Insight
The Final Report of the Independent Review of Australian Carbon Credit Units (ACCUs) was released on 9 January 2023 (the Report). We considered the independent review in our October update on the proposed biodiversity certificates scheme.
08 February 2023
Insight
Proponents of environmental, social and governance (ESG) practices have at times been accused of prioritising values over value, and concerns around the financial basis for ESG investment can become an obstacle for even the best-intentioned of businesses.
08 December 2022
Insight
On 18 October 2022 trade ministers in Australia and Singapore signed the Green Economy Agreement (GEA).
20 October 2022
Insight
On 10 October 2022, the Department of Industry, Science and Resources (DISR) opened submissions on exposure draft legislation to reform the Safeguard Mechanism under the National Greenhouse and Energy Reporting Act 2007 (Cth) (NGER Act).
12 October 2022
Insight
Transport is among the most emissions-heavy sectors. In 2019 the sector represented 23% of global energy-related emissions according to the 2022 Intergovernmental Panel on Climate Change (IPCC) Mitigation Report.
14 September 2022
Insight
The greening of our buildings and cities is critical in the pursuit of a net zero economy.
14 September 2022
Insight
Agriculture is both affected by climate change, and a contributor to troubling emissions. Governments around the world will not meet their climate goals without major changes to food production and consumption.
14 September 2022
Publication
In this report, we explore opportunities for Australia and China to work together and share knowledge to achieve net zero. We shine a light on examples to inspire and inform others.
14 September 2022
Featured Insight
From plastic-free flights to biofuels, the traditionally heavy-polluting aviation industry is determined to cut carbon. What does it all mean for airlines, lessors, financiers and passengers?
05 September 2022
Insight
The Australian Federal Government’s Climate Change Bill, which incorporates Australia’s new emissions reduction targets of 43% below 2005 levels by 2030 and net zero emissions by 2050, is well on the way to becoming law.
29 August 2022
Publication
In this alert we explain what investors need to know about China’s National ETS – what it covers, how it operates and the opportunities that it presents. China is the world’s largest producer of wind and solar energy and its market-leading technology industries will drive clean energy transition.
24 August 2022
Insight
The ability to monetise carbon and trade carbon credits through carbon markets is a core component of the global transition to net zero, without which global efforts to meet critical carbon reduction targets will be severely impacted. China’s national emissions trading scheme (the National ETS) is set to become the world’s largest carbon market by both trading volume and value, and will play an important part in the global net zero transition. The National ETS began trading in July 2021 and currently operates in parallel with nine pilot schemes (each a Pilot Scheme). China’s ability to peak emissions by 2030 and be carbon neutral by 2060 (the 30/60 strategy) relies in part on its ability to demonstrate to the world that it has the necessary infrastructure in place to maintain the integrity of the system that it has created to realise its 30/60 strategy.
03 August 2022
Insight
Integrity constitutes a fundamental aspect of a successful carbon market.
13 July 2022
Insight
Australia’s potential for developing carbon capture and storage (CCS) projects has been touted for some time — legislation for CCS projects has been in place in Victoria and Queensland for over a decade.
30 March 2022
Featured Insight
It is the island home of some of the world’s longest-living people and Wenchang chicken, a dish popular in mainland China and across south-east Asia.
17 December 2021
Publication
Whilst a unified National ETS is new to the Mainland, the concept and operation of a carbon market is not. The Mainland started to explore carbon emission trading a decade ago when the National Development and Regulatory Commission approved several regional pilot markets for trading carbon emissions allowances ("CEAs") in 2011. Those pilot schemes have been successful and continue to operate in parallel with the new National ETS. The long term goal is for the regional pilots to be consolidated into the National ETS which will be a cornerstone in the Mainland's policy for combatting climate change.
09 November 2021
Insight
If adopted, the CBAM will impose a levy on imports in carbon-intensive sectors from countries with lower environmental standards than the EU by 2023. This is likely to directly affect Australian and other non-EU businesses from those sectors who export into the EU market.
18 August 2021
Insight
China is poised to rollout a new national emissions trading scheme market demonstrating that China is committed to becoming a global leader in climate mitigation and renewable energy technologies. China's national strategy is to achieve peak levels by 2030 and carbon neutrality by 2060 (the "3060 Target"). This represents a myriad of opportunities for non-Chinese businesses to invest and trade in the renewable energy and green finance sectors.
03 June 2021
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