Bruce Hextall, Reuters 28 Oct 09;
GOLD COAST, Australia (Reuters) - Asian cities are likely to beat Australia in the race to become a carbon-trading hub, despite Australian plans to set up the region's first cap-and-trade market, industry experts said on Wednesday.
Sydney believes it is on pole position to become a hub, but the experts said Australia's most populous city was likely to be brushed aside as Hong Kong, Beijing and Singapore also staked claims to be Asia's main center for carbon trading.
So far, Europe is home to the world's only major carbon exchange and it dominates the $118 billion annual trade in carbon. Australia aims to become the second market, provided its lawmakers approve plans to usher in carbon-trading by mid-2011.
But China is likely to overtake Sydney as a base for trading carbon futures and other environmental products, as Beijing moves to greener policies, according to industry executives and experts attending a carbon-trading conference on Australia's Gold Coast.
Even Australian carbon banker John Marlow, global head of environmental financial products for Macquarie Group, said many firms would prefer to put staff into China rather than Sydney.
"The question is, where would my headcount be? Sydney has an advantage for me as Macquarie is headquartered there, but if I was coming in blind I would be scratching my head to set up there," Marlow told Reuters on the sidelines of the conference.
"I think in another two or three years you will probably see Hong Kong or Beijing as a hub."
China is already a major international source of carbon offsets -- tradeable credits that are used as a hedge by carbon polluters -- and is destined to play an even bigger role as more and more countries force their polluters to pay for emissions.
Typically, foreign investors plough money into green projects in China, then sell off the carbon offsets that are produced.
Singapore is also seen as a contender to become an Asian hub as it is near and has easy access to these Clean Development Mechanism projects, the main source of Certified Emission Reduction certificates that can used as carbon credits.
It is already a top Asian financial and oil trading hub, which offers complementary infrastructure to carbon trading.
Martijn Wilder, a partner in legal firm Baker & McKenzie, said Australia might use tax incentives to attract firms to set up carbon-trading businesses, but this was unlikely to succeed.
The European Climate Exchange, the world's dominant carbon market, voiced some skepticism on Wednesday about Asian ambitions to develop an international hub, saying the region was an important source of supply for carbon credits but not demand.
Asian centers would continue in Europe's shadow until they developed major cap-and-trade markets in their own right, which was still a way off, European Climate Exchange Chief Executive Patrick Birley told Reuters on the conference sidelines.
"Markets exist where the buyers are, not where the supply side is. Farmers always take their produce to market, the market doesn't come to them," he said.
In terms of cap-and-trade systems, Sydney might even find itself overtaken by Japan if Australia's planned scheme continued to suffer delays and political opposition, Birley added.
Japan's new government wants to introduce a compulsory cap-and-trade system for greenhouse gas emissions as early as the year to March 2012, the Nikkei business daily said last month.
Prime Minister Yukio Hatoyama has outlined a goal to cut such emissions by 25 percent from 1990 levels by 2020.
(Editing by Mark Bendeich)
Hong Kong, Beijing May Become Asia-Pacific Carbon Trading Hubs
Ben Sharples, Bloomberg 28 Oct 09;
Oct. 28 (Bloomberg) -- Hong Kong or Beijing may become the hub for carbon trading in the Asia-Pacific region within the next three years, with Australia needing to pass climate change laws to be a potential contender.
“I think in another two or three years we will see either Hong Kong or Beijing as the hub,” John Marlow, London-based global head of environmental financial products for Macquarie Bank, told the CarbonExpo Australasia conference on Queensland state’s Gold Coast today. Australian states are competing against each other to be the hub, rather than working together, he said.
Governments from around the world will meet in Copenhagen starting Dec. 7 for the final round of talks on a climate accord to replace the 1997 Kyoto Protocol, which expires in 2012. The negotiations are being run by the UN Framework Convention on Climate Change. Australia’s houses of parliament are expected to vote on domestic carbon legislation by the end of November.
“I think if Australia really wants to be a leader or a hub, then it better get its act together and do something quickly, including passing” the climate change bill, Geoff Sinclair, London-based global head of carbon sales and trading for Standard Bank, said today. Singapore and Hong Kong are working aggressively to become the regional center, he said.
China already has several carbon trading exchanges which have started up, said Mina Guli, Beijing-based vice chairman of Peony Capital. There is involvement from the U.S. to help them grow and expand, she said.
“I think you will see China become increasingly involved in this space,” Guli said.
