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SINGAPORE : Experts have said that as global financial markets begin to pick up, so are carbon trading markets.
Carbon trading allows countries to buy carbon credits from green initiatives to balance out global carbon emissions.
While such carbon trading projects may have been put on hold as a result of the financial crisis, experts said things are starting to look up.
In the past 12 months, carbon projects have taken a hit as financials tightened investment into the market due to the global credit crunch. This caused prices of carbon to drop by some 75 per cent in the eight months leading up to February this year.
Carbon credits are mainly traded via clean development mechanism (CDM) projects, a certification under the Kyoto Protocol aimed at global emission reduction.
With signs that the global economy is picking up, life is returning to the carbon trading market.
Michael Dreyer, vice president, Asia Pacific, Koelnmesse, said: "The market is coming up again. ... The carbon price has been pretty low, which basically is a movement that is connected to the global financial markets.
"So prices are coming up again, more projects are also being put on the market... China is (still) the biggest project offerer - about 60 per cent of the entire CDM market is taking place in China at the moment."
CDM's typically hold themes of sustainability such as clean energy generation projects.
For businesses coming out of the crisis, experts added that carbon trading is a great alternative source of finance for clean energy-related projects.
Mr Dreyer said: "CDM is offering an alternative way and an additional way to get funding to realise projects.
"You can use future savings in emissions to basically pay for the investment you are going to do, and of course that is a very good mechanism which is helping to bring projects on the ground a bit faster then traditional financing methods."
Experts said that going forward, while there may be concerns over shifts in the carbon trading market post-2012 when the Koyoto Protocol comes to an end, now is still an opportune time to gain first mover experience as carbon emissions and climate change will continue to be top issues in the years to come. - CNA/ms
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