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Bursa Carbon Exchange holds inaugural carbon auction

Bursa Carbon Exchange (BCX) concluded Malaysia’s first carbon auction on the 16th March 2023. BCX, the world’s first Shariah compliant voluntary carbon market (VCM) and a subsidiary of Bursa Malaysia, saw participation from 15 local buyers, purchasing a total of 150,000 Verra-registered carbon credits.

“We are very pleased with the successful execution of this inaugural auction, which has raised the awareness level of VCM and carbon offsetting opportunities in the country,” Umar Swift, CEO of Bursa Malaysia, commented.

Driven by the local corporate sector with financial institutions and government-linked companies, successful bidders for the auction include AmBank Islamic, MIDF Amanah Investment Bank (MIDF), Maybank as well as Sukuk issuers Yinson Holdings, Petroliam Nasional and Permodalan Nasional.

In separate statements, MIDF and Permodalan Nasional highlighted how participation in the carbon auction will contribute to their respective sustainability efforts.

Bursa Malaysia purchased carbon credits at the auction clearing price for two projects supplied by Vitol Asia: the Southern Cardamom project, a REDD+ (Reducing Emissions from Deforestation and Forest Degradation) project from Cambodia with 100,000 contracts and the Linshu Biogas Recovery and Power Generation project in China with 50,000 contracts.

The Cambodian project’s carbon credits were offered through the Global Nature-Based Plus Carbon Contract (GNC+) while the carbon credits for the Chinese project were offered as Global Technology-Based Carbon Contracts (GTC). The GTC contracts were oversubscribed, clearing at RM18.5 (US$4.12) while the GNC+ contracts cleared at RM68 (US$15.14) per contract.

“We now have a proven market mechanism which provides price discovery,” said Umar.

While Umar commented that the inaugural auction is a significant step toward unlocking Malaysia’s potential as a supplier of high-quality carbon credits, it is notable that the auction featured only foreign carbon offset projects.

The stock exchange has yet to respond to ISFI’s request for comment on the absence of local projects in the auction.

However, the stock exchange noted that BCX will expand its product offerings by accelerating the development of a pipeline of carbon offset projects through awareness and capacity-building programs which will draw on local and international VCM practitioner expertise.

Moreover, in a top-down bid to stimulate the market for Malaysia-generated carbon credits, ISFI previously reported that the Malaysian government announced a RM10 million (US$2.22 million) seed funding incentive to assure the demand for Malaysia-generated carbon credits traded on BCX.

Additionally, the exchange will also facilitate engagements between the public and private sectors to develop policies to support the emerging VCM industry and market.

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