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ASIFMA Issues Carbon Market Development Advice

The Asia Securities Industry & Financial Markets Association (ASIFMA) and international law firm King & Wood Mallesons have published a new paper offering recommendations on establishing, regulating and scaling up carbon markets. The advice aims to help governments, regulators, and market participants promote the development of carbon markets in Asia Pacific (APAC). The paper covers both compliance carbon markets (CCMs) and voluntary carbon markets (VCMs), offering recommendations to support their integrity and decarbonisation capacity. The paper said that to scale carbon markets “effectively”, there is an “imperative to ensure CCMs and VCMs in APAC are liquid, have high-integrity and are interoperable, and align with best international standards”. CCMs should focus on industry sectors that generate the highest emissions within the jurisdiction in which they operate in order to optimise their effectiveness, the paper noted. It also said that while VCMs are important mechanisms to enable the transition to net zero they “should not be seen as a long-term substitute for avoiding or reducing emissions, other than to the extent necessary in hard-to-abate industry sectors”. The paper calls for a “proportionate” approach to regulating carbon markets – one that balances the desire for market integrity against the need to avoid stifling growth and innovation. All carbon markets must adhere to four core principles – integrity, transparency, stability and accountability. It includes an overview of carbon markets in Australia, Hong Kong, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, mainland China and Singapore. 

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