First-ever carbon trading deal signed in Singapore

By Wong Siew Ying, Channel NewsAsia
05 November 2007

SINGAPORE: A Singapore-based company, ecoWise, has tied up with Japan's Kansai Electric Power Company to tackle climate change.

Under the four-year deal, the first to be signed in Singapore, ecoWise will trade carbon credits for Kansai, Japan's second largest power firm.

Carbon trading is a market-based mechanism to help mitigate the increase of carbon dioxide in the atmosphere.

The burning of fossil fuels is a major source of industrial greenhouse gas emissions, including carbon dioxide and methane.

Countries, which have signed the Kyoto Protocol, are legally bound to meet emissions targets by 2012.

The Kyoto Protocol is designed to cut greenhouse gas emissions by making the polluter pay for climate change.

A country that needs to fulfil its obligations may need to buy spare credits from another country that is on track to meet its target.

Under the latest Emission Reduction Purchasing Agreement, Kansai Electric Power Company will buy 95,000 carbon credits from ecoWise over four years, starting in 2008.

ecoWise said it would sell the carbon credits, which will be generated from its facility that processes industrial waste by using thermal energy, at market rate.

Lee Thiam Seng, CEO, ecoWise Holdings, said: "Currently, these agro wastes are using diesel burner, diesel dryer to dry. We are using renewable energy to dry. This will save about 6.1 million tonnes of diesel over the next four years."

The companies are in the process of getting the project registered with the United Nations Framework Convention on Climate Change.

Kansai said this contract is relatively small compared to its 20 other carbon credit deals around the world.

The firm estimates it will need to procure up to 13 million carbon credits between now and 2012.

Koji Toyama, Manager of the Global Environment Group, Kansai Electric Power, said: "In the near future, I hope Kansai will supply or provide environmental related technology to Singapore industries and if possible, Kansai would like to make a direct investment to the energy sector."

It is hoped that this collaboration will pave the way for more companies to follow suit.

For a start, ecoWise said it would explore opportunities in China, while KYOTOenergy, which had helped broker the deal, will look at investing in gas cogeneration projects.

Michel Buron, CEO of KYOTOenergy, said: "The market in 2006 for emission reductions was around US$24 billion. It is expected to grow to US$100 billion by 2010, and I would say the region – Southeast Asia – will take its share of it, but we see that this region is a bit behind compared to India or China, or even Latin America."

But industry players said there are more emission reduction projects coming on-stream in countries like Malaysia, Indonesia and Vietnam, and the sector is set to grow.

However, the rate of adoption will depend on the level of confidence and awareness of how carbon credits can benefit businesses.

Climate change is expected to be discussed at the upcoming ASEAN Summit in Singapore.

Industry players hope this can further promote sustainable development.


- CNA/so