September 17, 2025 • 26 mins
Stronger ecosystems that bolster investor confidence have become essential to global carbon markets' growth. "Carbon markets can only scale at the speed of trust," says Oi-Yee Choo, CEO of Singapore-based Climate Impact X (CIX), tells Conrad Tan, Bloomberg Intelligence ESG integration analyst. Choo explains what's needed to build this trust, why the gap between compliance and voluntary carbon markets is narrowing, and how countries' focus on their own needs risks fragmenting markets further. They also discuss how Asia's mix of suppliers and buyers of carbon credits could support deeper, more liquid carbon markets that support the decarbonization ambitions of governments and companies worldwide.
This episode was recorded on Sept. 8, 2025.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:09):
ESG is constantly evolving. Over the years, it has shifted
from socially responsible investing to impact to sustainable finance, with
terminology changing once again. What isn't changing is the underlying science,
market pressures, and tangible physical and financial impacts from the
climate crisis, regulatory pressures and consumer expectations. We aim to
filter out the noise by speaking with industry experts to
(00:32):
identify what is really driving value. Welcome to ESG Currents.
I'm Conrad Dunn, ESG integration analyst for APEC at Bloomberg
Intelligence or BI for short, and I'm your host for
today's episode. Today we're talking about carbon markets, that is,
markets for trading carbon credits representing the removal, reduction, or
(00:53):
avoidance of greenhouse scares emissions from specific projects. Carbon credits
are the focus of intense debate in terms of how
big a role they should play in climate mitigation, what
rules are needed to ensure the integrity of mitigation outcomes
they represent, and how these rules should be enforced. Our
own BI carbon analysis of more than four hundred and
eighty of the world's top greenhouse gas emitting companies shows
(01:15):
that many industries will have to rely on carbon offsets
just to stay on track for science based the carbonization pathways,
but the supply and trading of carbon credits is very fragmented,
limiting price discovery and companies access to high quality credits.
To discuss some of these issues, I'm delighted to have
as our guest today, Oe Too, chief Executive Officer of
(01:37):
Climate Impact X, a Singapore based carbon exchange known as
CIX for short. Oe has more than two decades of
experience in banking and financial markets and was appointed as
CEO to lead the Climate Impact X last September. Today
she joins me in our Bloomberg office in Singapore. OI,
thank you again for being here.
Speaker 2 (01:57):
Hi Conrad, thanks for having me in your really a
nice studio today.
Speaker 1 (02:01):
They likely to have you.
Speaker 2 (02:03):
Now.
Speaker 1 (02:03):
Let's start maybe with a question around one of the
key concerns that investors have about carbon credits, which is
their quality, sometimes referred to as the integrity. Could you
help our listeners understand why this is such a critical
issue and how it affects the development of carbon markets
more generally.
Speaker 2 (02:22):
Yeah, thanks, Conrad. I think what's really important to understand
about carbon credits is that many of the buyers today
are likely to be governments, likely to be corporates, and
when they buy a carbon credit and they retire it,
they want to know that they're buying something with integrity right.
(02:43):
For example, if you have a forest project, a forestry project,
or what we call nature based companies want to know
that that has an impact and a real measurable impact.
What they don't want is to buy a project without
the right accreditation or validation behind it and get accused
of greenwashing. I mean that to them is a huge
(03:04):
reputational risk. So what is important in the quality and
integrities Obviously things like it has berail, additional measurable, permanent
There a lot of registries today increasingly who are looking
at these projects and they're able to help build methodologies
(03:25):
that the projects can align themselves to so that it's
science based and it's measurable. Now, what happens when you
don't have trust in the market is you cannot scale, right.
Carbon markets can only scale at the speed of trust.
So the more that we ensure that these projects have
a robust ecosystem that helps to validate the quality and integrity,
(03:49):
and that includes registries, but it also includes a bigger ecosystem.
For example, ratings agencies, so they are starting to be
a more robust ecosystem to support that. Really, because we
need to scale the markets right now because of quality, integrity,
the many other issues is creating a very shallow market.
(04:13):
And as such, companies, if they don't have confidence in
procuring these credits, it's not going to scale. And we
all know that actually we need capital to be moving
into carbon projects globally, because the governments don't have enough money.
Corporates have a responsibility to procure these combon credits and
play their part as well.
Speaker 1 (04:34):
I'd like to build on that. I mean, you said
something really interesting which I really like. Just carbon markets
scale at the speed of trust and beyond quality and
integrity concerns, what, in your view some of the other
key issues that are holding back the development today of deeper,
more liquid carbon markets.
Speaker 2 (04:54):
You know, the market right now is still at a
relatively young stage. It is very fragmented. And when I
say fragmented, I mean sort of the variety of projects,
the standards, the registries. You know, there's so many of
them right now, and there's no scale to those, there's
(05:16):
no depth to those, and when buyers don't start to
support these projects. Investors don't come in to invest in
these projects, so it's a bit of a chicken and
egg and this is causing sort of the lack of
liquidity and transparency. So because policy uncertainty dampens confidence. Right
when a corporate looks at this and says, well, you know,
(05:38):
I have to allocate resources to many many things business sustainability,
how do I and that what I do with carbon
is strategic and it's impactful. So right now, because of
the lack of confidence in the market, it is not helping.
(05:59):
The market is very shallow. Corporates don't have therefore don't
have the confidence. When you don't have platforms that provide
transparency of information and transparency of pricing, even if they
decided on a particular project, corporate oftentimes have to do
their own due diligence. They don't have the capacity to
do that. Right If you're a small ESG team or
(06:20):
a sustainability team, you're probably already dealing with ten other
projects within the organization. Having to take on the complexity
of carbon markets often is quite daunting. The second thing
is without a deep and liquid market, you know, corporates
are left thinking or bias are left thinking what's the price?
How do I notice the right price? How do I
(06:41):
if I start to commit to acquiring carbon credits, how
do I do that in the longer term, in the
three to five year horizon when I have to plan
out my twenty thirty targets, How do I know where
pricing is going to be in five years time?
Speaker 1 (06:58):
Right?
Speaker 2 (07:00):
These are issues that are just starting to come up, because,
as we see, twenty thirty is not that far away.
It's about five years away, and corporates are starting to
realize that they have to put in quite a lot
of energy and work in building the longer range planning
for twenty thirty, and carbon markets become actually a significant
part of that solution for them.
Speaker 1 (07:22):
Super interesting, and I agree that the ability to look
forward and have some kind of sense of where prices
might be is critical for strategic planning for corporates. And
just in the context of what you've just mentioned, what
role does climate impact X or CIX seek to play,
and perhaps what you hope to achieve and also the
(07:43):
strategy that you're pursuing towards that.
Speaker 2 (07:47):
So CIX has quite an interesting history. We were founded
in twenty twenty one actually out of the emerging stronger
task force that Singapore, you know, the ministries and private
sector sort of came together post COVID and one of
the areas that Singapore is very focused on is how
to develop carbon services. I think it saw the importance
(08:10):
of how carbon could sit within the broader Singapore environmental
financial system, and therefore TAMASI, DBS, Singapore Exchange and Standard
Chartered and eventually Mizuho came together to form Climber Impact X.
The idea of Climber Impact X is to help scale
(08:33):
the carbon markets but also provide a trusted platform to
bring integrity and liquidity of carbon credits to our global buias.
So what we do today is we serve corporates who
have fairly complex need and carbon credits, and increasingly we
see these corporates look beyond carbon credits. They also buy
(08:56):
other what we call environmental attributes like renewable energy certificates.
So with sort of broaden our product range. But also
we see eventually where traders and financial institutions would one
a platform that helps to drive liquidity and price transparency.
So we serve both the corporates, the traders financial institutions.
(09:18):
We have you know various partners. Really the endgame is
to help move capital from corporates or buyers or governments
to the projects that need them and are the most impactful.
And it could be a different different types of carbon
credit projects. It could be nature based, which we have
(09:39):
a lot of that in this part of the world,
in Southeast Asia because we have a very rich nature
based ecosystem, all the way to engineered removal credits, for example,
direct air capture, which are sort of technical, more technical,
there's sort of facilities that absorb carbon and sequester it,
so that's a different type of carbon credit. But obviously
(10:02):
what we want to do is to service where the
buyers and the suppliers would meet, right.
Speaker 1 (10:10):
I'd like to turn our attention now to a specific
example of an industry, and international aviation I think is
an example where the use of carbon credits is explicitly
built into the decarbonization strategy. It's also supported by multilateral
agreement at the UN level, as well as binding requirements
on many companies, referring here, of course to the UN
(10:33):
Corsia initiative to limit emissions from international flights by requiring
airplane operators to pay a market price for credits to
offset their access emissions. I'm curious in your view, how
is CORSA influencing the development of carbon markets globally.
Speaker 2 (10:49):
We are generally very excited about the development of COSSIA,
even though you know, with these global initiatives it takes
time to really reach and in flat point, but you know,
aviation is one of the top you know, three sectors
that contribute the most to global emissions, right, and so
(11:12):
I think this initiative is a really powerful one and
it sets a global standard for all the other big
sectors who emit. As an example, aviation is not just
using carbon credits. Obviously, there's also the development of sustainable
aviation fuel. Now, I personally think everything needs to happen
(11:35):
all at once for us to really make a meaningful
impact into the reduction of emissions and reduction of carbon
But sustainable aviation fuel is also in its infancy stage, right,
So every tool that we have in the toolkit is
going to be impactful or you know, it will add
to impact. COSIA itself is one of the first global
(11:56):
compliance schemes for a sector. There are different phases to it.
We're just about to enter a more mandatory phase, but
it does create somewhat of a standard for airlines and
it creates, for example, different methodologies are approved within the
KASIA standard, but it also requires governments of the host
(12:19):
countries of these projects to also authorize the aviation sector
to use it or authorize the buyer to use it,
regardless of whether it's aviation or not. And this is
going to be a globally collaborative effort. So if we
can get this right, and if we can get it
to scale, airlines will finally have quote unquote standardized product
(12:42):
and it will be a standardized you know, it will
be a standardized language, so that all the airlines just
talk about Quassia and how much they're buying and how
they're fulfilling their targets using COSIA credits. And because the
there is a process that which these projects or methodologies
are being approved, there's also a certain pathway to reviewing
(13:05):
the types of projects and sort of the approval of
the methodologies, so to some extent, some implicit nod that
these methodologies are approved by the aviation sector. So to
be able to scale, that will obviously require many moving parts.
As I mentioned, governments need to build the infrastructure to
be able to authorize because they themselves need to set
(13:28):
up their own local or domestic inventory. They need to
understand what their or nationally determined contributions are, you know,
and then sort of be able to carve out what
is required for aviation and put that on a pathway
for airlines to procure. But if the scales, this obviously
shows that there can be a standardized industry related product
(13:54):
that actually potentially is scalable if you apply that across
different sectors.
Speaker 1 (13:58):
Possibly I'd like to build a bit on that. Because
the airline industries progress and struggles in pursuing sustainable growth,
I think highlight the difficulties that many other industries also
face in navigating a complex policy and regulatory environment for
carbon credits and also potentially a market based carbon price
that's volatile. I mean, you've also mentioned some of the
(14:20):
other challenges fased, for example, a sustainable aviation fuel industry
that's still in its infancy. You've also touched on the
government role in putting together the infrastructure that's needed to
authorize buyers of the Corsier credits. I'd love to hear
(14:43):
where you think some of the other key gaps are
and how these could be addressed.
Speaker 2 (14:48):
As I mentioned, I think the first starting point is
how do we build the infrastructure as it were? Right now,
many of the projects sort of sit within countries who
are still building their own capacity. Governments, I think have
(15:08):
to work with investors and capital to allow that to
flourish in carbon markets. Right. So, for for example, in
Indonesia and Malaysia, we have very very rich sources of
nature based projects, and so the governments within Indonesia and
Malaysia are very very keen to make sure that they
build both the knowledge based the capacity, but also the
(15:31):
right infrastructure to move forward with efficient need getting capital
from developed countries into their projects right And as an
example of those, I think policy right now is also
every country is trying to figure out because different countries
are different needs. Right Singapore, for example, it's a net
buyer of carbon credits. You know, Indonesia would be a
(15:53):
net supplier of carbon credits. So the issues and the
needs are very different to every kind tree comes across
with slightly different nuancers in the way they're trying to
build out their carbon infrastructure, so that I think, over
time should align. Right now, it's just because everybody's focused
(16:13):
on how to solve their gaps and their issues. Someone
expressed that slightly differently, and that creates some issues of
fragmentation to some extent. Within Asian we have what we
call Asian Common Carbon Framework, So this is Malaysia, Indonesia, Singapore, Thailand.
We've come together really to try and harmonize what we do,
(16:35):
what we say, language, you know, what kind of projects,
you know, what kind of methodologies or which you know registries.
So we're kind of trying to build that harmonization among Asian,
but it will take time, as I said, because different
countries have built, building in different speeds and building with
different capacities as they start. We also observe that many
(16:58):
different countries are also using different mechanisms to express that.
So for example, in Singapore, we have carbon tax, so
for the top emitters in Singapore, they are required to
pay a certain amount of tax above a certain amount
of emissions, and these companies can buy carbon credits to
offset some of that tax liability. In some countries there's
(17:21):
an implementation of US called Emissions Trading Scheme, So Indonesia,
I think Thailand is trying to get one approved. China
has an ETS somewhat modeled after the EU ETS system,
which is actually quite well established and very deep and liquid.
So what we are also seeing is that there is
starting to be a compliance world that will somewhat converge
(17:46):
with the voluntary world. And this is the perhaps the
way of government saying, well, guys, I need to somewhat
soft encourage you and hard encourage you the corporates to
contribute to emissions reduction. And this is starting to narrow
because you know, projects like for example in Costia may
well be an Article six point two approved projects that
(18:08):
governments you know, trade between each other and six point
four and so the ability to make sure that the
projects are developed is critical. And where the credits will go,
whether it's under a certain methodology or under a certain scheme,
is also very important. And so this is this will
start to converge quite globally, especially as the UN develops
(18:29):
at six point four mechanisms, methodologies and their registry and
the process at which six point four credits will be traded.
Speaker 1 (18:38):
And beyond the aviation, what are some other industries that
you think could have a significant influence on the future
trajectory of carbon markets.
Speaker 2 (18:46):
I think besides aviation, what we observe is the technology sector,
and I mean that in the broader sense, is the
sector that is most committed to making impact. And what
we're observing is the just the sheer growth of the
(19:08):
needs of the big tech companies. AI being one of
the biggest teams, is driving a lot of the capacity
building in data centers, semiconductors. This matter rights across the
tech value chain, and the tech companies realize that the
more that they build the data centers to power the
(19:29):
needs of AI, the more that they need to encourage
incorporate carbon into their sustainability thinking or their decarbonization because
the growth is I mean, the growth is just so
rapid we cannot imagine, right, And so the commitment we
see from the technology sector extends beyond the Magnificent seven. It,
(19:52):
you know, sort of drops down to the whole ecosystem
in terms of the way they think about using renewable
energy and renewable energy certificates. And also they need to
put some capital into impact in terms of carbon reduction.
So the big tech companies Microsoft, for example, has put
in quite a lot of capital into carbon removal projects,
(20:13):
and we see that across the Googles and Amazons, and
they are driving that trend towards their suppliers and their ecosystem,
which is really interesting and fascinating. But it is a
reflection of how corporates and industries realize that they have
a role to play and they have a responsibility to
(20:35):
help mitigate some of the emissions coming out of the
growth of their business.
Speaker 1 (20:41):
I want to turn out to a broader issue, which
is the very strong backlash in political pressure we've seen
over the past year or so against most things ESG
in the US and also some parts of Europe. That's
really hard to ignore. And how do you see that
impacting the development of carbon markets.
Speaker 2 (21:00):
It certainly has from a sentiment and a morale point
of view, impacted the industry, especially in the beginning of
the year, but as we moved on, you know, across
twenty twenty five, what we're observing is the corporates who
are very committed and who have built the thinking, the
strategy around how they incorporate carbon offsets into their broader
(21:24):
sustainability pathway. They remain very committed, and I think in
particular industries who know that they are you know, significant emitters. Again, technology, aviation,
chipping all come to a conclusion that this is not
going to stop their commitment. What is obviously, well, I
(21:46):
guess a bit more complicated is it's not just about
the ESG backlash. It also is about economic uncertainty, and
I think that is adding as much to the distraction
as it were, because you know, if birds have to
think about tariffs, have to think about you know, cost
of doing business, then they you know, they will they
(22:08):
will have to make certain choices and you know, maybe
have to delay certain targets, or they have to redeploy
some capital. All this is obviously playing out right now,
but I don't think it has stopped them from saying, well,
I'm going to be you know, I'm going to just
completely ignore my that zero targets, right, that's not happening
(22:29):
as well. Certainly we've not seen that. So we think
the commitment level of investing in capacity and starting to
be more thoughtful is still there. The question is sort
of it is probably taking a little bit longer. But
having said that, twenty thirty is not that far away,
and so I think the for corporates to sort of
(22:52):
start stepping up in the next two three years to
build knowledge, to build capacity to work with partners like
CIX for example, to help them give a leg up
in terms of capacity. The types of credits that out there,
how do we help and partner up these corporates will
be quite critical in the next few years. I think
(23:13):
Asia is very interesting because Asia right now is a
very good mix of host countries or countries with supply
and countries want at buyers. China obviously is a big
player in this space as well, so I think Asia
is actually going to be very exciting in this space.
Speaker 1 (23:28):
I agree. And maybe just looking ahead, I know you've
touched on some of this already, but how do you
see carbon markets evolving and what are the sort of
key things you think we need to see that might
accelerate the development of carbon markets generally.
Speaker 2 (23:44):
Yeah, I think, as I mentioned earlier, around the convergence
of the compliance and the voluntary markets. The voluntary markets
right now are driven by corporates who have, you know,
a certain view they want to express and they want
to you know, they want to deploy capital where there's impact.
There still sort of feels a little bit more boutiques
(24:07):
out right. As the market becomes more compliance driven, called
sea for example, carbon tax for example, ets will all
create a significant capital movement into this space. With this
significant capital and with the standardization, because compliance will increasingly
(24:28):
become more standard type products.
Speaker 1 (24:31):
Right.
Speaker 2 (24:31):
For example, a carbon tax corporate may they just want
to buy the credits that fit that are approved by Singapore,
right the government. They don't need to perhaps do as
much work on the due diligence piece, well they could,
but it becomes a more standard product, right, and they
(24:52):
know that when they buy it, for example, with a
trusted platform, they know that the quality that they're getting,
the certainty of the credit, how that's being retired is
very clear. So the more that happens, I think, the
deeper the market will be. And you know when we
see markets like the EU ets once you start getting bigger,
deeper and corporates know that they need to plan out
(25:12):
a five year horizon two because they know, for example,
the Singapore carbon tax has step ups, right that won't
they prescribed, but there are step ups in carbon tax price.
So they know that they will need offsets of within
a certain range to make that the economics of it.
So they need to plan out long range three to
five years. What are the projects that may be eligible
(25:35):
and therefore sort of and once you corporates start thinking
about forward hedging, the banks therefore should come in and
support that, and so hopefully you know that will drive
liquidity and scale and transparency for the carbon market. So
it's pretty exciting actually for the next five years.
Speaker 1 (25:54):
Well, thank you so much, Oji, I'd really love to
continue our conversation, but we are almost out of time
for today. Thank you again and so much for your
time and sharing your insights to all our listeners. I
hope you've enjoyed my conversation with OE as much as
I have. You can find out more information about how
companies and industries globally are responding to ESG related risks
and opportunities by going to bispace ESG go on any
(26:18):
Bloomberg terminal, and if you have an ESG quandary or
burning question you would like to ask bi's expert analysts,
please do send us an email at ESG Currents at
Bloomberg dot net. Thank you for tuning in, and do
join us again next time.
ESG is constantly evolving. Over the years, it has shifted
from socially responsible investing to impact to sustainable finance, with
terminology changing once again. What isn't changing is the underlying science,
market pressures, and tangible physical and financial impacts from the
climate crisis, regulatory pressures and consumer expectations. We aim to
filter out the noise by speaking with industry experts to
(00:32):
identify what is really driving value. Welcome to ESG Currents.
I'm Conrad Dunn, ESG integration analyst for APEC at Bloomberg
Intelligence or BI for short, and I'm your host for
today's episode. Today we're talking about carbon markets, that is,
markets for trading carbon credits representing the removal, reduction, or
(00:53):
avoidance of greenhouse scares emissions from specific projects. Carbon credits
are the focus of intense debate in terms of how
big a role they should play in climate mitigation, what
rules are needed to ensure the integrity of mitigation outcomes
they represent, and how these rules should be enforced. Our
own BI carbon analysis of more than four hundred and
eighty of the world's top greenhouse gas emitting companies shows
(01:15):
that many industries will have to rely on carbon offsets
just to stay on track for science based the carbonization pathways,
but the supply and trading of carbon credits is very fragmented,
limiting price discovery and companies access to high quality credits.
To discuss some of these issues, I'm delighted to have
as our guest today, Oe Too, chief Executive Officer of
(01:37):
Climate Impact X, a Singapore based carbon exchange known as
CIX for short. Oe has more than two decades of
experience in banking and financial markets and was appointed as
CEO to lead the Climate Impact X last September. Today
she joins me in our Bloomberg office in Singapore. OI,
thank you again for being here.
Speaker 2 (01:57):
Hi Conrad, thanks for having me in your really a
nice studio today.
Speaker 1 (02:01):
They likely to have you.
Speaker 2 (02:03):
Now.
Speaker 1 (02:03):
Let's start maybe with a question around one of the
key concerns that investors have about carbon credits, which is
their quality, sometimes referred to as the integrity. Could you
help our listeners understand why this is such a critical
issue and how it affects the development of carbon markets
more generally.
Speaker 2 (02:22):
Yeah, thanks, Conrad. I think what's really important to understand
about carbon credits is that many of the buyers today
are likely to be governments, likely to be corporates, and
when they buy a carbon credit and they retire it,
they want to know that they're buying something with integrity right.
(02:43):
For example, if you have a forest project, a forestry project,
or what we call nature based companies want to know
that that has an impact and a real measurable impact.
What they don't want is to buy a project without
the right accreditation or validation behind it and get accused
of greenwashing. I mean that to them is a huge
(03:04):
reputational risk. So what is important in the quality and
integrities Obviously things like it has berail, additional measurable, permanent
There a lot of registries today increasingly who are looking
at these projects and they're able to help build methodologies
(03:25):
that the projects can align themselves to so that it's
science based and it's measurable. Now, what happens when you
don't have trust in the market is you cannot scale, right.
Carbon markets can only scale at the speed of trust.
So the more that we ensure that these projects have
a robust ecosystem that helps to validate the quality and integrity,
(03:49):
and that includes registries, but it also includes a bigger ecosystem.
For example, ratings agencies, so they are starting to be
a more robust ecosystem to support that. Really, because we
need to scale the markets right now because of quality, integrity,
the many other issues is creating a very shallow market.
(04:13):
And as such, companies, if they don't have confidence in
procuring these credits, it's not going to scale. And we
all know that actually we need capital to be moving
into carbon projects globally, because the governments don't have enough money.
Corporates have a responsibility to procure these combon credits and
play their part as well.
Speaker 1 (04:34):
I'd like to build on that. I mean, you said
something really interesting which I really like. Just carbon markets
scale at the speed of trust and beyond quality and
integrity concerns, what, in your view some of the other
key issues that are holding back the development today of deeper,
more liquid carbon markets.
Speaker 2 (04:54):
You know, the market right now is still at a
relatively young stage. It is very fragmented. And when I
say fragmented, I mean sort of the variety of projects,
the standards, the registries. You know, there's so many of
them right now, and there's no scale to those, there's
(05:16):
no depth to those, and when buyers don't start to
support these projects. Investors don't come in to invest in
these projects, so it's a bit of a chicken and
egg and this is causing sort of the lack of
liquidity and transparency. So because policy uncertainty dampens confidence. Right
when a corporate looks at this and says, well, you know,
(05:38):
I have to allocate resources to many many things business sustainability,
how do I and that what I do with carbon
is strategic and it's impactful. So right now, because of
the lack of confidence in the market, it is not helping.
(05:59):
The market is very shallow. Corporates don't have therefore don't
have the confidence. When you don't have platforms that provide
transparency of information and transparency of pricing, even if they
decided on a particular project, corporate oftentimes have to do
their own due diligence. They don't have the capacity to
do that. Right If you're a small ESG team or
(06:20):
a sustainability team, you're probably already dealing with ten other
projects within the organization. Having to take on the complexity
of carbon markets often is quite daunting. The second thing
is without a deep and liquid market, you know, corporates
are left thinking or bias are left thinking what's the price?
How do I notice the right price? How do I
(06:41):
if I start to commit to acquiring carbon credits, how
do I do that in the longer term, in the
three to five year horizon when I have to plan
out my twenty thirty targets, How do I know where
pricing is going to be in five years time?
Speaker 1 (06:58):
Right?
Speaker 2 (07:00):
These are issues that are just starting to come up, because,
as we see, twenty thirty is not that far away.
It's about five years away, and corporates are starting to
realize that they have to put in quite a lot
of energy and work in building the longer range planning
for twenty thirty, and carbon markets become actually a significant
part of that solution for them.
Speaker 1 (07:22):
Super interesting, and I agree that the ability to look
forward and have some kind of sense of where prices
might be is critical for strategic planning for corporates. And
just in the context of what you've just mentioned, what
role does climate impact X or CIX seek to play,
and perhaps what you hope to achieve and also the
(07:43):
strategy that you're pursuing towards that.
Speaker 2 (07:47):
So CIX has quite an interesting history. We were founded
in twenty twenty one actually out of the emerging stronger
task force that Singapore, you know, the ministries and private
sector sort of came together post COVID and one of
the areas that Singapore is very focused on is how
to develop carbon services. I think it saw the importance
(08:10):
of how carbon could sit within the broader Singapore environmental
financial system, and therefore TAMASI, DBS, Singapore Exchange and Standard
Chartered and eventually Mizuho came together to form Climber Impact X.
The idea of Climber Impact X is to help scale
(08:33):
the carbon markets but also provide a trusted platform to
bring integrity and liquidity of carbon credits to our global buias.
So what we do today is we serve corporates who
have fairly complex need and carbon credits, and increasingly we
see these corporates look beyond carbon credits. They also buy
(08:56):
other what we call environmental attributes like renewable energy certificates.
So with sort of broaden our product range. But also
we see eventually where traders and financial institutions would one
a platform that helps to drive liquidity and price transparency.
So we serve both the corporates, the traders financial institutions.
(09:18):
We have you know various partners. Really the endgame is
to help move capital from corporates or buyers or governments
to the projects that need them and are the most impactful.
And it could be a different different types of carbon
credit projects. It could be nature based, which we have
(09:39):
a lot of that in this part of the world,
in Southeast Asia because we have a very rich nature
based ecosystem, all the way to engineered removal credits, for example,
direct air capture, which are sort of technical, more technical,
there's sort of facilities that absorb carbon and sequester it,
so that's a different type of carbon credit. But obviously
(10:02):
what we want to do is to service where the
buyers and the suppliers would meet, right.
Speaker 1 (10:10):
I'd like to turn our attention now to a specific
example of an industry, and international aviation I think is
an example where the use of carbon credits is explicitly
built into the decarbonization strategy. It's also supported by multilateral
agreement at the UN level, as well as binding requirements
on many companies, referring here, of course to the UN
(10:33):
Corsia initiative to limit emissions from international flights by requiring
airplane operators to pay a market price for credits to
offset their access emissions. I'm curious in your view, how
is CORSA influencing the development of carbon markets globally.
Speaker 2 (10:49):
We are generally very excited about the development of COSSIA,
even though you know, with these global initiatives it takes
time to really reach and in flat point, but you know,
aviation is one of the top you know, three sectors
that contribute the most to global emissions, right, and so
(11:12):
I think this initiative is a really powerful one and
it sets a global standard for all the other big
sectors who emit. As an example, aviation is not just
using carbon credits. Obviously, there's also the development of sustainable
aviation fuel. Now, I personally think everything needs to happen
(11:35):
all at once for us to really make a meaningful
impact into the reduction of emissions and reduction of carbon
But sustainable aviation fuel is also in its infancy stage, right,
So every tool that we have in the toolkit is
going to be impactful or you know, it will add
to impact. COSIA itself is one of the first global
(11:56):
compliance schemes for a sector. There are different phases to it.
We're just about to enter a more mandatory phase, but
it does create somewhat of a standard for airlines and
it creates, for example, different methodologies are approved within the
KASIA standard, but it also requires governments of the host
(12:19):
countries of these projects to also authorize the aviation sector
to use it or authorize the buyer to use it,
regardless of whether it's aviation or not. And this is
going to be a globally collaborative effort. So if we
can get this right, and if we can get it
to scale, airlines will finally have quote unquote standardized product
(12:42):
and it will be a standardized you know, it will
be a standardized language, so that all the airlines just
talk about Quassia and how much they're buying and how
they're fulfilling their targets using COSIA credits. And because the
there is a process that which these projects or methodologies
are being approved, there's also a certain pathway to reviewing
(13:05):
the types of projects and sort of the approval of
the methodologies, so to some extent, some implicit nod that
these methodologies are approved by the aviation sector. So to
be able to scale, that will obviously require many moving parts.
As I mentioned, governments need to build the infrastructure to
be able to authorize because they themselves need to set
(13:28):
up their own local or domestic inventory. They need to
understand what their or nationally determined contributions are, you know,
and then sort of be able to carve out what
is required for aviation and put that on a pathway
for airlines to procure. But if the scales, this obviously
shows that there can be a standardized industry related product
(13:54):
that actually potentially is scalable if you apply that across
different sectors.
Speaker 1 (13:58):
Possibly I'd like to build a bit on that. Because
the airline industries progress and struggles in pursuing sustainable growth,
I think highlight the difficulties that many other industries also
face in navigating a complex policy and regulatory environment for
carbon credits and also potentially a market based carbon price
that's volatile. I mean, you've also mentioned some of the
(14:20):
other challenges fased, for example, a sustainable aviation fuel industry
that's still in its infancy. You've also touched on the
government role in putting together the infrastructure that's needed to
authorize buyers of the Corsier credits. I'd love to hear
(14:43):
where you think some of the other key gaps are
and how these could be addressed.
Speaker 2 (14:48):
As I mentioned, I think the first starting point is
how do we build the infrastructure as it were? Right now,
many of the projects sort of sit within countries who
are still building their own capacity. Governments, I think have
(15:08):
to work with investors and capital to allow that to
flourish in carbon markets. Right. So, for for example, in
Indonesia and Malaysia, we have very very rich sources of
nature based projects, and so the governments within Indonesia and
Malaysia are very very keen to make sure that they
build both the knowledge based the capacity, but also the
(15:31):
right infrastructure to move forward with efficient need getting capital
from developed countries into their projects right And as an
example of those, I think policy right now is also
every country is trying to figure out because different countries
are different needs. Right Singapore, for example, it's a net
buyer of carbon credits. You know, Indonesia would be a
(15:53):
net supplier of carbon credits. So the issues and the
needs are very different to every kind tree comes across
with slightly different nuancers in the way they're trying to
build out their carbon infrastructure, so that I think, over
time should align. Right now, it's just because everybody's focused
(16:13):
on how to solve their gaps and their issues. Someone
expressed that slightly differently, and that creates some issues of
fragmentation to some extent. Within Asian we have what we
call Asian Common Carbon Framework, So this is Malaysia, Indonesia, Singapore, Thailand.
We've come together really to try and harmonize what we do,
(16:35):
what we say, language, you know, what kind of projects,
you know, what kind of methodologies or which you know registries.
So we're kind of trying to build that harmonization among Asian,
but it will take time, as I said, because different
countries have built, building in different speeds and building with
different capacities as they start. We also observe that many
(16:58):
different countries are also using different mechanisms to express that.
So for example, in Singapore, we have carbon tax, so
for the top emitters in Singapore, they are required to
pay a certain amount of tax above a certain amount
of emissions, and these companies can buy carbon credits to
offset some of that tax liability. In some countries there's
(17:21):
an implementation of US called Emissions Trading Scheme, So Indonesia,
I think Thailand is trying to get one approved. China
has an ETS somewhat modeled after the EU ETS system,
which is actually quite well established and very deep and liquid.
So what we are also seeing is that there is
starting to be a compliance world that will somewhat converge
(17:46):
with the voluntary world. And this is the perhaps the
way of government saying, well, guys, I need to somewhat
soft encourage you and hard encourage you the corporates to
contribute to emissions reduction. And this is starting to narrow
because you know, projects like for example in Costia may
well be an Article six point two approved projects that
(18:08):
governments you know, trade between each other and six point
four and so the ability to make sure that the
projects are developed is critical. And where the credits will go,
whether it's under a certain methodology or under a certain scheme,
is also very important. And so this is this will
start to converge quite globally, especially as the UN develops
(18:29):
at six point four mechanisms, methodologies and their registry and
the process at which six point four credits will be traded.
Speaker 1 (18:38):
And beyond the aviation, what are some other industries that
you think could have a significant influence on the future
trajectory of carbon markets.
Speaker 2 (18:46):
I think besides aviation, what we observe is the technology sector,
and I mean that in the broader sense, is the
sector that is most committed to making impact. And what
we're observing is the just the sheer growth of the
(19:08):
needs of the big tech companies. AI being one of
the biggest teams, is driving a lot of the capacity
building in data centers, semiconductors. This matter rights across the
tech value chain, and the tech companies realize that the
more that they build the data centers to power the
(19:29):
needs of AI, the more that they need to encourage
incorporate carbon into their sustainability thinking or their decarbonization because
the growth is I mean, the growth is just so
rapid we cannot imagine, right, And so the commitment we
see from the technology sector extends beyond the Magnificent seven. It,
(19:52):
you know, sort of drops down to the whole ecosystem
in terms of the way they think about using renewable
energy and renewable energy certificates. And also they need to
put some capital into impact in terms of carbon reduction.
So the big tech companies Microsoft, for example, has put
in quite a lot of capital into carbon removal projects,
(20:13):
and we see that across the Googles and Amazons, and
they are driving that trend towards their suppliers and their ecosystem,
which is really interesting and fascinating. But it is a
reflection of how corporates and industries realize that they have
a role to play and they have a responsibility to
(20:35):
help mitigate some of the emissions coming out of the
growth of their business.
Speaker 1 (20:41):
I want to turn out to a broader issue, which
is the very strong backlash in political pressure we've seen
over the past year or so against most things ESG
in the US and also some parts of Europe. That's
really hard to ignore. And how do you see that
impacting the development of carbon markets.
Speaker 2 (21:00):
It certainly has from a sentiment and a morale point
of view, impacted the industry, especially in the beginning of
the year, but as we moved on, you know, across
twenty twenty five, what we're observing is the corporates who
are very committed and who have built the thinking, the
strategy around how they incorporate carbon offsets into their broader
(21:24):
sustainability pathway. They remain very committed, and I think in
particular industries who know that they are you know, significant emitters. Again, technology, aviation,
chipping all come to a conclusion that this is not
going to stop their commitment. What is obviously, well, I
(21:46):
guess a bit more complicated is it's not just about
the ESG backlash. It also is about economic uncertainty, and
I think that is adding as much to the distraction
as it were, because you know, if birds have to
think about tariffs, have to think about you know, cost
of doing business, then they you know, they will they
(22:08):
will have to make certain choices and you know, maybe
have to delay certain targets, or they have to redeploy
some capital. All this is obviously playing out right now,
but I don't think it has stopped them from saying, well,
I'm going to be you know, I'm going to just
completely ignore my that zero targets, right, that's not happening
(22:29):
as well. Certainly we've not seen that. So we think
the commitment level of investing in capacity and starting to
be more thoughtful is still there. The question is sort
of it is probably taking a little bit longer. But
having said that, twenty thirty is not that far away,
and so I think the for corporates to sort of
(22:52):
start stepping up in the next two three years to
build knowledge, to build capacity to work with partners like
CIX for example, to help them give a leg up
in terms of capacity. The types of credits that out there,
how do we help and partner up these corporates will
be quite critical in the next few years. I think
(23:13):
Asia is very interesting because Asia right now is a
very good mix of host countries or countries with supply
and countries want at buyers. China obviously is a big
player in this space as well, so I think Asia
is actually going to be very exciting in this space.
Speaker 1 (23:28):
I agree. And maybe just looking ahead, I know you've
touched on some of this already, but how do you
see carbon markets evolving and what are the sort of
key things you think we need to see that might
accelerate the development of carbon markets generally.
Speaker 2 (23:44):
Yeah, I think, as I mentioned earlier, around the convergence
of the compliance and the voluntary markets. The voluntary markets
right now are driven by corporates who have, you know,
a certain view they want to express and they want
to you know, they want to deploy capital where there's impact.
There still sort of feels a little bit more boutiques
(24:07):
out right. As the market becomes more compliance driven, called
sea for example, carbon tax for example, ets will all
create a significant capital movement into this space. With this
significant capital and with the standardization, because compliance will increasingly
(24:28):
become more standard type products.
Speaker 1 (24:31):
Right.
Speaker 2 (24:31):
For example, a carbon tax corporate may they just want
to buy the credits that fit that are approved by Singapore,
right the government. They don't need to perhaps do as
much work on the due diligence piece, well they could,
but it becomes a more standard product, right, and they
(24:52):
know that when they buy it, for example, with a
trusted platform, they know that the quality that they're getting,
the certainty of the credit, how that's being retired is
very clear. So the more that happens, I think, the
deeper the market will be. And you know when we
see markets like the EU ets once you start getting bigger,
deeper and corporates know that they need to plan out
(25:12):
a five year horizon two because they know, for example,
the Singapore carbon tax has step ups, right that won't
they prescribed, but there are step ups in carbon tax price.
So they know that they will need offsets of within
a certain range to make that the economics of it.
So they need to plan out long range three to
five years. What are the projects that may be eligible
(25:35):
and therefore sort of and once you corporates start thinking
about forward hedging, the banks therefore should come in and
support that, and so hopefully you know that will drive
liquidity and scale and transparency for the carbon market. So
it's pretty exciting actually for the next five years.
Speaker 1 (25:54):
Well, thank you so much, Oji, I'd really love to
continue our conversation, but we are almost out of time
for today. Thank you again and so much for your
time and sharing your insights to all our listeners. I
hope you've enjoyed my conversation with OE as much as
I have. You can find out more information about how
companies and industries globally are responding to ESG related risks
and opportunities by going to bispace ESG go on any
(26:18):
Bloomberg terminal, and if you have an ESG quandary or
burning question you would like to ask bi's expert analysts,
please do send us an email at ESG Currents at
Bloomberg dot net. Thank you for tuning in, and do
join us again next time.
Host
Eric Kane
Popular Podcasts
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.