Opinion | Hong Kong’s carbon trading market will encourage corporate action, not greenwashing

Critics have been quick to dismiss the carbon credits market, yet it provides heavy financial incentives for companies to reduce and offset their emissions

With governments consistently failing to raise the necessary funding for climate action, private-sector initiatives should be welcomed

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Exchange Square, site of the Hong Kong exchange, in Central. The Hong Kong Exchanges and Clearing recently launched the Core Climate carbon credits trading platform. Photo: May Tse

Published: 9:30pm, 1 Mar 2023

Hong Kong is quickly becoming a hub for the global carbon market, the UN-endorsed mechanism to drive funding toward on-the-ground climate action. The Hong Kong Green Finance Association has led the charge in mobilising public and private actors to drive finance towards sustainability outcomes.

And the Hong Kong Exchanges and Clearing’s new Core Climate exchange platform is a perfect example of the infrastructure needed to match sellers and producers of carbon credits in the carbon market.

Carbon credits are an important part of the world’s decarbonisation journey as they help to fund carbon-capturing activities like reforestation, installation of renewable energy in developing countries, and the capture of methane from mining and industry.

The carbon credit market is maturing quickly, and scrutiny and care are important to ensure integrity and certainty in the processes and projects that underlie it.

In January, the UK newspaper The Guardian published an article claiming that 94 per cent of REDD+ credits (a type of offset that rewards forest owners for conserving, instead of cutting, their forests) do not represent genuine carbon emission reductions.

The findings are based on the way Verra, the leading registry for certifying carbon credits, certifies projects. The article hangs its hat on one peer-reviewed study that evaluated the strength (or weakness) of each project’s baseline, or, in other words, how much deforestation would have taken place if the project never existed, which despite even the most rigorous and conservative methods, is an academic exercise.

Opinion | Hong Kong’s carbon trading market will encourage corporate action, not greenwashing

Critics have been quick to dismiss the carbon credits market, yet it provides heavy financial incentives for companies to reduce and offset their emissions With governments consistently failing to raise the necessary funding for climate action, private-sector initiatives should be welcomed

Critics have been quick to dismiss the carbon credits market, yet it provides heavy financial incentives for companies to reduce and offset their emissions

With governments consistently failing to raise the necessary funding for climate action, private-sector initiatives should be welcomed