The Hong Kong stock exchange has carried out the first batch of carbon credit trades on its new voluntary carbon market in the first four weeks since launch, joining a handful of Asian exchanges in tapping opportunities resulting from governments’ push to achieve climate goals.
The platform recorded more than 40 trades between Oct. 28 and Nov. 24, representing around 400,000 tonnes of carbon credits.
The inaugural trades on Hong Kong Exchanges & Clearing’s (HKEX) Core Climate platform announced on Thursday spanned carbon credits from more than 30 international projects involving over 20 Core Climate participants, the exchange said.
A carbon credit or offset permits allow the owner to emit one metric tonne of carbon dioxide or equivalent greenhouse gas.
“The HKEX plays a key role in supporting Hong Kong’s rise as a green, low-carbon financial market,” Christopher Hui, secretary for financial services and the treasury, said at the debut ceremony.
Participants in the inaugural trades included Bank of China (Hong Kong) and CLP Holdings.
The HKEX’s platform allows trading in both RMB and HKD, driving accessibility and ensuring flexibility for participants. This is different from Climate Impact X, the voluntary carbon market backed by Singapore Exchange Ltd (SGX), Temasek, DBS Bank and Standard Chartered Bank, whose credits are traded in U.S. dollars.
Hong Kong, Singapore and Malaysia saw exchanges in recent years racing to establish their voluntary carbon markets in response to their governments’ push for carbon neutrality, or a state of balancing emissions of carbon with its removal.
Singapore-based Climate Impact X completed its pilot auction in November 2021. That trade involved 170,000 carbon credits from eight global projects and 19 buyers.
Bursa Malaysia has said its voluntary carbon market would start trading by end of this year.
Barrier to carbon trading among corporates in Asia is a lack of well-established channels, said John Thang, Standard Chartered’s head of financial markets in Hong Kong and Greater Bay Area.
China, the world’s largest carbon market by volume, started a national emission trading scheme in 2021 with a dedicated exchange in Shanghai. It has committed to achieving peak emissions before 2030 and net zero by 2060.
Projects on Hong Kong’s carbon marketplace are verified under international standards, providing a platform for Chinese project owners to benefit with their carbon credits, said Jason Tu, co-founder and chief executive of MioTech, a sustainability data provider.
“But a successful voluntary carbon market would also need participation by a wide array of carbon credit buyers, including both global financial institutions and corporate users, such as oil and gas companies,” Tu said.