CARBON projects reduce carbon emissions or increase the sequestration or storage of carbon from the atmosphere and help mitigate the impact of climate change.
These projects generate carbon credits that private and public entities can buy to offset or neutralise their own carbon emissions, as well as trade on emissions trading systems, otherwise known as carbon markets.
Despite the Covid-19 economic slowdown, carbon markets saw rapid growth in the past few years. In 2020, the value of global carbon markets surged to a record US$277 billion — equivalent to the issuance of 222 million metric tonnes of carbon credits (MtCO2e).
The demand is expected to continue with the recent COP26 summit of the United Nations Framework Convention on Climate Change and its resulting Glasgow Climate Pact, which saw nations refine and strengthen their commitments to the Paris Agreement to limit global warming to below 2° C.
Southeast Asia is home to 15 per cent of the world's tropical rainforests — which can sequester more carbon from the atmosphere than temperate or boreal forests in other parts of the world — making it a prime region for carbon projects that can generate high-quality credits.
According to some reports, the region holds almost a quarter of the world's total potential for natural climate solutions. Unfortunately, Southeast Asia also has the highest rate of deforestation among major tropical regions worldwide.
The loss of more than 50 per cent of original forest covers has led to forests becoming a net source of carbon emissions instead of a carbon sink over the past 20 years.
A recent study found that 58 per cent of threatened forests (about 114 million hectares) in Southeast Asia could be protected as financially viable carbon projects, which could help:
AVOID 835 MtCO2e of emissions per year — forests in Riau and West Kalimantan, Indonesia have the greatest climate mitigation potential;
SUPPORT the annual dietary needs of 323,739 people — particularly important in Sabah;
REGULATE water quality by retaining 78 per cent of nitrogen pollutants — critical for populations around the Mekong River; and,
SAFEGUARD 25 million hectares of Key Biodiversity Areas — essential to align with the Paris Agreement, the Post-2020 Global Biodiversity Framework and the United Nations Sustainable Development Goals.
Furthermore, about 6.6 million hectares of forests in Southeast Asia can potentially deliver all four benefits, most of them being in Thailand (1.7 million hectares) and Indonesia (1.6 million hectares).
The region is in a unique and strong position to provide quality infrastructure for the carbon market.
Indeed, many member states, including Indonesia, Malaysia, Philippines, Thailand and Vietnam, already have or are setting up national programmes for carbon trading in their hopes to reach climate commitments.
In addition to government efforts, a joint venture between several major private industry players resulted in the launch of an international carbon trading platform, Climate Impact X, in Singapore in December last year.
They include DBS Group, Standard Chartered, Singapore state investor Temasek and market operator Singapore Exchange.
While encouraging, several challenges exist. The success of carbon trading in the region is critically dependent on national and regional coordination, as well as accuracy and transparency.
Last year, controversy arose surrounding a US$80 billion carbon trading deal to protect two million hectares of rainforests in Sabah from logging for the next 100 years.
The deal, also known as the Nature Conservation Agreement, generated public uproar as it was done absent of public consultation, particularly with indigenous peoples.
Public consultation is crucial and is part of the UN's processes on carbon trading; failure to consult can result in carbon credits from Sabah being rejected by the market.
Indeed, strong public sentiment and awareness regarding the importance of protecting and conserving nature was reflected in the results of a recent survey of more than 3,000 citizens across Indonesia, Malaysia and the Philippines.
The survey, commissioned by the Atri Advisory company, found that close to 90 per cent of respondents in these three countries were either extremely or very concerned about the biodiversity crisis and wanted their governments to do more in halting biodiversity loss, such as setting aside land for protected areas in their countries.
A global target now being considered by the 190 UN member states meeting this month in Geneva is to establish 30 per cent of our land and seas as protected areas by 2030.
Blessed with an abundance of natural resources, Southeast Asia should seize the opportunity to become a global leader in the carbon trade.
Adequate policies and improved data collection, combined with transparent disclosures, will strengthen public ownership and investments into local and regional carbon projects, which will generate multiple co-benefits and revenue to support a sustainable and resilient future.
The writers are respectively Science Advisor to the Campaign for Nature and Research Coordinator of the Southeast Asia Science Advice Network (SEA SAN)