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Expert suggests companies be cautious on voluntary carbon market

12/04/2023 07:44 PM
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One of the five forums on the voluntary carbon market on the sidelines of COP28 in Dubai. It was organized by the British government. CNA photo Dec. 4, 2023
One of the five forums on the voluntary carbon market on the sidelines of COP28 in Dubai. It was organized by the British government. CNA photo Dec. 4, 2023

Dubai, UAE, Dec. 3 (CNA) A Taiwanese expert on carbon markets has advised Taiwanese companies to go it slow on participation in the nascent voluntary carbon market (VCM), which has sparked debate at a major environmental forum being held in Dubai.

Liou Je-liang (劉哲良), a research fellow at the Center for Green Energy of the Taipei-based Chung-Hua Institution for Economic Research (CIER), urged in an interview Sunday with CNA on the sidelines of COP28 that Taiwanese companies be cautious when thinking of entering the VCM.

Liou said there are several popular independent international organizations involved in carbon markets that are still developing, but the quality of their carbon credits still carries major risks.

"It's better to wait until international standards [for carbon credits] are formed," Liou said.

European media outlets the Guardian and Die Zeit reported on some of those risks in January 2023 after a nine-month investigation.

They said that 90 percent of carbon credits from forest management verified by Verra, the world's biggest certifier of voluntary carbon offsets, did not exist, with many of the credits either duplicated or not providing the carbon offsets they claimed to.

Liou said that if Taiwanese enterprises want to buy carbon credits to offset "carbon fees" the government will impose in the future, or meet environmental impact assessments for projects in Taiwan, they "should prioritize the consumption of domestic carbon credits."

"This will set our primary rules of the game now," he said, referring to an emerging carbon credits exchange in Taiwan.

Taiwan did not establish a Carbon Solution Exchange until August 2023, and it still only offers consultation services as the government ponders what it should charge for carbon fees.

Taiwan Carbon Solution Exchange (TCX) Chairman Sherman Lin (林修銘) said in mid-October that international carbon credits are expected to be available on the exchange by the end of the year.

The exchange of domestic carbon credits will only begin, however, after Taiwan starts to collect carbon fees, which is expected to begin in 2025, he said.

Nov. 29: International carbon credits to be available next month: TCX

Companies in Taiwan that emit more than 25,000 metric tons of carbon per year will be required to pay carbon fees starting in 2025 based on emissions totals calculated in 2024, according to the Ministry of Environment.

Voluntary carbon markets were a hot topic on the fourth day of the 2023 United Nations Climate Change Conference, or the 28th Conference of the Parties of the U.N. Framework Convention on Climate Change (UNFCCC), more commonly referred to as COP28.

The markets were first formed in 2003, and their total market value grew to US$2 billion in 2021 before slumping as international media exposed "scandals" in the VCMs that led to accusations that they were becoming tools for businesses to engage in "greenwashing."

In this environment, there were at least five forums focusing on VCM during the COP28, which is being held from Nov. 30 to Dec. 12 in Dubai.

A forum held on the opening day of COP28 in Dubai on Nov. 30, 2023. Photo: CNA
A forum held on the opening day of COP28 in Dubai on Nov. 30, 2023. Photo: CNA

Pedro Barata, a co-chair of the expert panel for the Integrity Council for the Voluntary Carbon Market (ICVCM), said at a forum on Sunday that such markets are at a crossroads.

Since VCMs have never been placed under any supervision or control mechanisms before, Barata believed that government interference would be inevitable in the future, he said.

VCMs are places that give companies, nonprofit organizations, governments, and individuals the opportunity to buy and sell carbon offset credits. A carbon offset is an instrument that represents the reduction of one metric tonne of carbon dioxide or GHG emissions.

There are currently three kinds of carbon credit issuance bodies, one of them being the United Nations and the second being nonprofits that manage standards in environmental and social markets, including Verra.

The third kind are agencies of countries and territories that release carbon credits on their own, according to Liou.

(By Tien Hsi-ju and Elizabeth Hsu)

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