Singapore on track to start carbon credit trades by year-end

A new commodities exchange planned for Singapore is on schedule to start trading in carbon credits by year-end, according to a senior government official.

In a speech yesterday at the Carbon Forum Asia conference, senior minister of state for trade and industry S. Iswaran said the nation's forthcoming Singapore Mercantile Exchange (SMX) is "on track for year-end" and will provide "an electronic trading platform for futures and options trading on a diversified range of commodities, including energy, metals, agricultural commodities, currencies, commodity indices and carbon credits".

The new exchange is part of the city-state's plan to become a regional hub for carbon trades, said Iswaran.

According to government estimates, 70 per cent of UN-backed clean development mechanism carbon offset projects are located within Asia-Pacific and as a result the region is "poised to be the largest supplier of certified emissions reductions [CERs] to the global carbon market".

Earlier this year, an incentive scheme covering commodity derivatives trading and fund management was extended to include emissions derivatives. Additionally, Singapore offers tax concessions to companies with carbon trading activities, which Iswaran cited as a main factor behind a decision by Tricorona AB, the second-largest buyer of carbon credits, to set up a global trading hub in Singapore in May.

Iswaran added that as well as enabling trading in carbon credits, Singapore planned to provide financing and development services for CO2-reduction projects.

He announced that the government has set aside "close to S$700m [US$500m] to build R&D and manpower capabilities in various clean tech areas, including clean energy and environmental and water technologies".

In doing so, officials hope to entice companies to "use Singapore as a test-bed" for related emerging technologies, such as smart grids and green building techniques.

Carbon Forum Asia, a two-day event ending today in Singapore, is a trade fair and conference providing information on the region's latest developments in carbon emissions policies and regulations.