Orangutans are on the verge of extinction. About 90% of their habitat, the rainforests of Southeast Asia, are lost to palm oil plantations and other human use. Plans for a new global carbon exchange in Singapore by the end of the year may be needed by great apes.
The Singapore Exchange, state investment company Temasek, creditors Standard Chartered Bank and DBS Bank will launch markets where carbon offset credits can be traded. Credits generate investment in nature maintenance projects.
Climate Impact X, a joint venture, plans to use satellites, artificial intelligence, and an independent advisory board to ensure that these efforts are properly managed.
There is demand. More and more companies around the world are targeting net zero emissions, but are hampered by financial and technical constraints. Many of the most polluted industries, including energy and agriculture, have low rates of return. This creates a demand for simpler options to buy carbon offsets.
Singapore is a good place for carbon credit exchanges. Neighboring countries Malaysia and Indonesia are major fossil fuel producers. It also produces more than 85% of the world’s palm oil. To grow palm trees, businesses endanger species such as orangutans, elephants, and rhinos by burning rainforests, releasing carbon dioxide, and destroying habitats.
Rainforest destruction is a major source of greenhouse gases, producing about 15% of the world’s emissions. Deforestation in Indonesia alone accounts for 8% of the total.
Singapore handles 35% of all commodities traded in Asia. This means that it is home to a lot of local capital and expertise. This is an advantage, but it also shows that city-states are sector-dependent. The oil industry accounts for 5% of GDP, even more if we include related industries such as chemicals and financial services. Singapore is home to the world’s largest refueling port and major refineries. The refining and petrochemical sectors account for about three-quarters of the industrial sector’s emissions.
There are some risks with this scheme. Companies can and do use offsets to reach their goals without investing in more environmentally friendly operations. There is a high probability of fraud in providing offsets. However, previous attempts to stop deforestation in the region have been disastrous failures. Creating financial incentives and a simpler trading environment to do so is only good news for orangutans.
If you’re a subscriber and want to be alerted when a Lex article is published, it’s above the headline at the top of this page.[myFT に追加]Click the button.