Bursa Malaysia completes first carbon credit auction

Malaysian stock exchange Bursa, through its subsidiary Bursa Carbon Exchange (BCX), completed the country's first carbon credit auction on 16 March.

Trading firm Vitol supplied all 150,000 Verra-registered carbon credits that the BCX offered from one project each under its new global technology-based carbon contract (GTC) and global nature-based carbon contract (GNC+). The credits were purchased by 14 buyers, which were mostly government-linked companies and financial institutions from Malaysia.

The GTC contracts featured carbon credits from the Linshu biogas recovery and power generation project in China. The contracts were oversubscribed and cleared at 18.50 ringgit ($4.12) per contract.

The GNC+ contracts featured carbon credits from Southern Cardamom, which is a reducing emissions from deforestation and forestation (REDD+) project in Cambodia. These GNC+ contracts fetched a clearing price of 68 ringgit/contract at the auction.

State-owned oil and gas firm Petronas and Malaysian banks CIMB and Maybank were some of the buyers that successfully bid for the credits.

Bursa Malaysia hopes that the auction mechanism will incentivise local project owners to develop carbon credit-generating projects, by providing a clear signal on the economic viability of carbon credits.

"We welcome the government's commitment of the 10mn ringgit seed funding incentive for Malaysian-generated carbon credits to be traded on [the] BCX," Bursa Malaysia's chief executive Muhamad Umar Swift said. "We look forward to working with relevant stakeholders to facilitate the development of a vibrant VCM [voluntary carbon market] ecosystem."

By Ryan Ang