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Treasury & Capital Markets
Malaysia completes first carbon credit auction
Shariah-compliant BCX facilitates purchase of 150,000 credits from two climate-friendly projects in China and Cambodia
Tom King 20 Mar 2023

Bursa Carbon Exchange (BCX), Bursa Malaysia’s new carbon trading platform, completed its first carbon credit auction with domestic buyers acquiring all the available Verra-registered carbon credits.

The auction, which was carried out electronically, saw 15 participants from various industries purchasing a total of 150,000 credits.

The world’s first Shariah-compliant carbon exchange, BCX enables the trading of standardized contracts with underlying carbon credits from climate-friendly projects and solutions, which corporates can use to offset their emission footprint and meet climate goals.

The BCX auction facilitated the price discovery of carbon credits from two new products offered on the carbon trading platform, the Global Technology-Based Carbon Contract (GTC) and the Global Nature-Based Plus Carbon Contract (GNC+).

The GTC featured carbon credits from the Linshu Biogas Recovery and Power Generation Project in China. The contracts were oversubscribed and cleared at 18.50 ringgit (US$4.12) each.

The Chinese project has benefits that align with the United Nations Sustainable Development Goals, namely of generating clean energy (SDG 7), providing decent work (SDG 8), and addressing climate change by reducing fugitive methane emission leakage to the atmosphere (SDG 13).

Carefully selected projects

The GNC+ contracts featured carbon credits from the Southern Cardamom Project, which is a reducing emissions from deforestation and forest degradation (REDD+) project from Cambodia. 

The project also comes with a climate, community and biodiversity (CCB) standard that provides additional co-benefits, contributing to the livelihoods of local communities and supporting biodiversity conservation.

This GNC+ achieved a clearing price of 68 ringgit (US$15.15) per contract at the auction.

BCX says both projects were carefully selected and curated to spur local interest in carbon offsetting project development, and resulted in strong interest from the domestic corporate sector, notably government-linked companies and financial institutions.

Among the successful bidders at the auction were AmBank (M) Berhad, AmBank Islamic Berhad, AmInvestment Bank Berhad, CIMB Bank, Malayan Banking Berhad, and Telekom Malaysia.

“We are very pleased with the successful execution of this inaugural auction, which has raised the awareness level of VCM and carbon offsetting opportunities in the country,” says Bursa Malaysia chief executive officer Muhamad Umar Swift. “We now have a proven market mechanism which provides price discovery. This is a significant step towards unlocking Malaysia’s potential as a supplier of high-quality carbon credits.”

To ensure proper governance during price discovery, Bursa Malaysia says it did not participate in the bidding process but purchased carbon credits only at the auction clearing price.

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