from the ground Up

by Jessica Cheam, The Straits Times, Nov 13 2008

THE global credit crunch has hit the carbon trading industry, with investments in carbon projects slowing down as credit dries up, said World Bank carbon expert Jari Vayrynen yesterday.
But despite the recent financial industry turmoil, the carbon market itself has been “relatively stable”, said chief executive Henry Derwent of the International Emissions Trading Association.
The price of a carbon credit “slid a few euros” in recent months and has not crashed in the same manner as stock markets worldwide, he noted.
Carbon trading is a system designed to provide a financial incentive for companies to cut back on greenhouse gas emissions which contribute to climate change.
Both speakers were addressing a two-day Carbon Forum Asia held at Suntec City, hosted for the second time by Singapore.
Senior Minister of State for Trade and Industry S. Iswaran, the guest of honour, told the forum that carbon project funding should not take a back seat despite the economic downturn.
Climate change caused by greenhouse gas emissions is a global problem with serious consequences that calls for “an urgent and collective solution”, said Mr Iswaran.
Singapore remains committed to growing a carbon services cluster and to serve as a regional carbon price centre and trading hub, he said.
Speaking to reporters later, he added: “We have to look at the industry from the long-term perspective…Mitigating greenhouse gas emissions…is an objective valid even through the economic downturn.
“In the current downturn, some will argue this may not be high priority. This is true to some extent, but…this is the right time to look at these issues, as it is positioning your business for the next upturn,” he added.
The Sustainable Energy Association of Singapore chairman Edwin Khew agreed, adding that the world will recover from the economic crisis, “and carbon projects are long-term investments”.
In fact, projects such as those in renewable energy offer good and stable returns for banks, which are shying away from riskier loans, he said.
Mr Vayrynen, operations team leader of the World Bank’s carbon finance unit, reiterated that it was crucial for carbon projects to get access to funding as they are cost-effective ways of reducing carbon emissions.
The good news is multilateral organisations like the World Bank and the Japan Bank for International Cooperation remain committed to providing credit lines for such projects despite the global crisis, its representatives said at the forum.
New World Bank figures show the global carbon market doubled last year to ¤47 billion (S$90 billion), with Asia accounting for 80 per cent of the carbon trading and China making up more than half.