1、Unlocking the Full Potential in Carbon Markets:Pathways to Growth and Sustainability in AsiaUnlocking the Full Potential in Carbon Markets:Pathways to Growth and Sustainability in Asia As the global urgency to combat climate change intensifies,carbon markets are becoming a critical tool for driving

2、meaningful progress toward net-zero goals.At BCG,we have long believed in the power of bold,scalable solutions to address humanitys greatest challenges.Carbon markets represent a critical opportunity to align innovation,finance,and policy to transform the way we mitigate and remove carbon emissions.

3、Asias resources and technological potential position it as a leader in this transformation,from advancing nature-based solutions to pioneering engineered technologies.Singapores role as a regulatory and financial hub highlights the importance of cross-border collaboration in creating robust,inclusiv

4、e markets.This report is a roadmap for actionhighlighting the supply,demand,and market structures required to unlock carbon markets full potential.It also reflects the collective insights from leaders,innovators,and policymakers committed to making climate solutions actionable.By building trust,tran

5、sparency,and scalability,we can create a thriving ecosystem that delivers economic and environmental benefits.ForewordRich LesserGlobal Chair,Boston Consulting Group1.Carbon Dioxide RemovalsContentsDesign thinking 2:CDR demand04Design thinking 1:CDR1 supply03State of carbon markets02Introduction01Ac

6、knowledgements08Way forward07Solution case studies06Design thinking 3:Carbon market mechanisms05Unlocking the Full Potential in Carbon Markets:Pathways to Growth and Sustainability in Asia The Green Circle Climate Forum,held during the Insights Forum 2024,convened global leaders to address the criti

7、cal role of durable carbon dioxide removal(CDR)in achieving net-zero emissions.The Intergovernmental Panel on Climate Change(IPCC)emphasizesthat CDR is essential to counterbalance hard-to-abate residual emissions,featuring prominently in all 1.5C and 2.0C-aligned scenarios.Despite the urgency,the cu

8、rrent pace of CDR deployment is insufficient.BCGs projections indicate that by 2050,between six and ten gigatons of residual CO emissions will remain unabated globally.Asia,with its abundant carbon sinks and resources,is poised to play a pivotal role in scaling CDR solutions.Singapore,in particular,

9、has the potential to become a central hub for facilitating global carbon markets.This report distils key insights from the Forum,outlining strategies to accelerate durable CDR and advance global decarbonization efforts.INTRODUCTIONIntroduction&keydesign thinking outcomes01Unlocking the Full Potentia

10、l in Carbon Markets:Pathways to Growth and Sustainability in Asia Design thinking suggestions Singapore as a Global Hub Singapores reputation for regulatory excellence positions it to lead the development of a global marketplace for carbon removal credits,furthering collaboration between regions and

11、 technologies.Demand-Side Strengthen Regulatory Mandates and Buyer Coalitions Governments can consider integrating carbon credits into compliance markets and establish mandates for hard-to-abate sectors.Facilitate long-term offtake agreements and buyer coalitions to provide predictable demand.Promot

12、e Co-Benefits to Drive Market Adoption Highlight the additional value of credits that deliver biodiversity,social impact,and community welfare benefits.Encourage corporate and public adoption by incentivizing credits that align with SDGs and ESG frameworks.Supply-SideScaling Local Carbon Removal Pro

13、jects Enhance capacity-building for local stakeholders to support sustainable and scalable carbon removal initiatives.Foster the growth of both nature-based solutions and engineered solutions by addressing barriers such as costs,technical expertise,and feedstock availability.Standardize High-Quality

14、 Credits Establish unified frameworks for carbon credit evaluation,ensuring credibility and integrating co-benefits like biodiversity and community impact.Market StructuresBuild Trading Infrastructure for Liquidity and Transparency Develop exchange platforms and consistent quality standards to facil

15、itate trading and price discovery for carbon credits.Create mechanisms to address counterparty risks and foster market confidence through rigorous monitoring and verification systems.Leverage Blended Financing Models to De-Risk Investments Public and philanthropic funds must absorb early-stage risks

16、,paving the way for private investment.CDR essential in all climate scenarios94.51.750.7502Unlocking the Full Potential in Carbon Markets:Pathways to Growth and Sustainability in Asia STATE OF CARBON MARKETSCDR is critical for achieving net-zero emissions,particularly in addressing residual emission

17、s from hard-to-abate sectors.The global carbon market plays a key role in scaling CDR by establishing standards and mechanisms for generating,purchasing,and trading carbon credits.The recent adoption of standards under Article 6 of the Paris Agreement at COP29 highlights efforts to ensure emissions

18、reductions are credible,transparent,and verified.Carbon markets enable financial flows from emitters to abatement and removal projects through mechanisms like carbon credits,relying on robust infrastructure including standards,accreditation,and risk management.Compliance markets,nearing$1 trillion i

19、n value,are driven by regulatory requirements,while voluntary markets are expanding as companies and individuals aim to reduce their carbon footprints.Nature-based solutions like reforestation are gaining momentum for their sustainability and credibility,while engineered solutions are poised for gro

20、wth as technology advances.Required global CDR volume under different scenarios(GtCO2 p.a.,2023-50)1.Ruben Prtz et al:Analysis of 83 1.5C compatible and high overshoot IPCC AR6 WGIII pathways 2.Lamb et al:Analysis of scenarios in categories C1 and C3 of IPCC AR6 scenario database 3.Lamb et al.;Inclu

21、des assumption that countries without a quantifiable strategy preserve their current levels of conventional CDR on land Note:Variance of CDR volumes in IPCC AR6 pathways is very high,indicating diverging beliefs in degree of emission reductionSource:IPCC AR6 WGIII Chapter 12;Ruben Prtz et al 2023 En

22、viron.Res.Commun.;William F.Lamb,et al.2024 Nature Climate Change;IEA Net Zero Roadmap;BCG CDR Market ModelStarting point does not include 2.2 Gt of nature-based removals in national inventories(no additionality)Highly indicative0.015Gt202520302035204020452050Current NDCs&long-term targets Based on

23、111 NDCs(2030)and all long-term strategies for 2050 up to Nov.23(COP28)3 Below 2C-compatible removal pathwayMedian annual CDR deployment in 2050 in IPCC AR6 below 2C-compatible pathways2 1.5C-compatible removal pathwayMedian annual CDR deployment at Net Zero in IPCC AR6 1.5C-compatible and high over

24、shoot pathways1Current trajectoryCurrent trajectory based on current commitments and pledgesThe carbon removal landscapespans across nature-based,hybrid,&technological solutionsINTRODUCTIONSTATE OF CARBON MARKETS03Unlocking the Full Potential in Carbon Markets:Pathways to Growth and Sustainability i

25、n Asia 1.Durable wood products and mineral products considered as separate CDR methods in other reports subsumed under use phase of respective CDR methods in this report 2.Includes artificial upwelling3.The currently emerging broader term Bio-CCS includes a variety of implementation options not sole

26、ly related to capturing CO2 in energy production in this study,we use BECCS and subsume Waste-to-energy plants(WACCS)with subsequent CCS and biogas producing facilities with CO2 capturing,liquefaction and storage 4.Includes Direct Ocean Capture and Electrochemical Ocean RemovalSource:Swiss RE,IPCC;E

27、xpert interviews;BCG analysisAfforestation BiocharLong-lived products Geological storage Direct air capture (DAC)Bioenergy with carbon&storage(BECCS)Geological storage,similar to an oil reservoir(porous rock in great depth,sealed by impermeable caprock)Soil carbon sequestration Enhanced weathering D

28、irect ocean removal Ocean fertilization Ocean fertilization Wetland restorationBlue carbonNature-Based RemovalsNATURE-BASED SOLUTIONSAfforestation,reforestation,improved forest managementPlanting forests&restoring existing ones to absorb CO2 via photosynthesis(incl.durable wood products1)Enhanced(ro

29、ck)weatheringSpreading finely ground silicate rocks over large areas to chemically react with CO2 and form stable mineralsBiochar carbon removalConverting biomass residues or other biogenic material into a stable form of carbon,which is used to enhance soils or used in durable products,e.g.,asphalt

30、or cementOcean/river alkalinity enhancementAdding minerals to oceans/rivers to increase alkalinity and enhance the waters capacity to absorb COOcean fertilization2Adding nutrients to oceans to boost phytoplankton growth(which absorbs CO2 via photosynthesis)DAC(Direct Air Capture)Capturing CO2 direct

31、ly from the atmosphere and storing it underground or using it in durable products1BECCS(Bioenergy with carbon capture and storage)3Producing energy or methane from biomass,capturing&storing CO2 or using it in durable products1Bio-oil injectionConverting biomass into bio-oil and injecting it into geo

32、logical underground formationsDirect ocean removal4Energy-powered carbon removal directly from ocean using membrane and electrodialysis technologySoil carbon sequestrationImplementing agricultural practices that enhance the capacity of soils to hold carbonPeatland and wetland restorationRestoring pe

33、at-&wetlands to their natural state to enhance their ability to store carbonBlue carbon managementConserving&restoring coastal/marine ecosystems,like mangroves,salt marshes,and seagrassesEnhanced Natural Processes(hybrid)Technology-Based RemovalsENGINEERED SOLUTIONSRemovals are likely to gain share

34、ofoverall market:Nature-based solutionsare growing fastest in near-termSTATE OF CARBON MARKETS0.343%36%0.543%20%34%0.441%19%36%0.641%22%35%2%0.839%23%36%3%0.537%39%20%1.039%23%35%3%0.537%39%20%1.139%24%35%3%0.636%5%37%21%1.239%24%34%3%0.735%5%37%22%1.242%27%28%3%0.727%6%41%25%+169%Increase in NBS cr

35、editsfrom 2020-30:10 xLULULULULULULU2024E2025E2026E2028E2029E2030E2027ECarbon offsets supply(GtCO2-e pa)Removals-NBSRemovals-EngineeredAvoidance-NBSAvoidance-EngineeredL Lower Bound ScenarioU Upper Bound Scenario1.Actual 2.Sustainable development goals.Note:Hybrid credits are split equally between r

36、espective categories(e.g.,Increased Forest Management)Source:Registries(Gold Standard,ACR,CAR);CORSIA;IMO;IEA;CDP;Company commitments;ICAP;Fraunhofer ISI;BCG analysisNature-based solutions(NBS)and engineered solutions are advancing together to drive global carbon removal efforts,with Asia playing a

37、pivotal role in scaling both approaches.Engineered solutions,such as Direct Air Carbon Capture(DAC)and Bioenergy with Carbon Capture and Storage(BECCS)and enhanced natural process solutions like Biochar Carbon Removal and Enhanced Rock Weathering are gaining traction as technological maturity improv

38、es and costs decline.DAC costs,for instance,are currently around$500 per ton of CO removed,with expectations of significant reductions up to$100 per ton as the technology scales.Despite these advances,challenges related to scalability and measurement persist.Meanwhile,NBS,including afforestation,ref

39、orestation,and wetland restoration,are growing at the fastest rate due to their alignment with sustainable development goals,cost efficiency(ranging from$5 to$1000 per ton for projects like afforestation),and widespread acceptance.Asia accounts for 45%of global carbon credits issued,with NBS expecte

40、d to deliver a tenfold increase in credit generation by 2030.Engineered solutions are projected to gain traction beyond 2030 as technological hurdles are addressed.04Unlocking the Full Potential in Carbon Markets:Pathways to Growth and Sustainability in Asia 05Unlocking the Full Potential in Carbon

41、Markets:Pathways to Growth and Sustainability in Asia STATE OF CARBON MARKETSNational&state carbon marketsare creating a material price for carbon2019$269$329$902$912$9542020202120222023Annual Value(billions USD)World Carbon Markets Total Value by SegmentCompliance marketsVoluntary marketsAnnual Val

42、ue(billions USD)Voluntary Carbon Markets by Value of Traded Carbon Credits20192020202120222023$0.32$0.53$2.10$1.90$2.40China,SK,NZ and JapanNorth America(WCI,RGGI,WA ETS)Clean Development MechanismUK ETSEU ETSGlobally,emissions trading systems(ETS)and carbon taxes are being implemented across nation

43、s,creating a material price for carbon.Asia is positioned as a key supplier of quality carbon credits,reflecting increasing regional efforts in the carbon market landscape.However,as of December 2024,voluntary markets face challenges of oversupply,although retirements of credits are showing signs of

44、 recovery.Industry coalitions and sector-specific commitments are emerging trends likely to enhance market demand and standardization.Singapore has emerged as a leader in the regions carbon ecosystem,exemplified by its bilateral collaborations with 19 countries announced at COP29.These agreements ai

45、m to facilitate cross-border carbon credit trading while maintaining rigorous standards for transparency&sustainability.Singapores Climate Impact X(CIX)supports this role by providing a platform for high-quality voluntary carbon credit trading,with the potential to handle credits from DAC and BECCS

46、as they mature.1.ETS also under consideration in Colombia,Mexico,Ukraine Sources:World Bank(2024),LSEG Carbon Market year in review 2023,BCG Analysis,WRINational&local carbon markets are creating a material price for carbon STATE OF CARBON MARKETS06Unlocking the Full Potential in Carbon Markets:Path

47、ways to Growth and Sustainability in Asia ETS and carbon tax implemented or scheduledETS implemented or scheduled implementation Carbon tax implemented or scheduled1 ETS or carbon tax under consideration Suriname Portugal Spain France Switzerland Iceland Ireland United Kingdom Netherlands Denmark No

48、rway Sweden Finland Poland Estonia Latvia Belgium Germany Czechia Austria Slovakia Hungary Slovenia Croatia Italy Greece Bulgaria Romania Lithuania Kazakhstan Mainland China South Korea Indonesia Papua New GuineaAustralia Colombia Uruguay Argentina Chile South Africa Albania Ukraine Japan Northwest

49、Territories Yucatan Oregon Wyoming Brazil Paraguay Mauritania Morocco Senegal Cte dIvoire Kenya Botswana Turkey Pakistan India Bangladesh Bhutan Thailand Vietnam Malaysia Philippines Jalisco Colima Svalbard British Columbia Manitoba Nunavut Yukon Baja California Sur Baja California Sonora Chihuahua

50、Coahuila Quintana Roo Campeche Tobasco Chiapas Veracruz Oaxaca 1.ETS also under consideration in Colombia,Mexico,Ukraine,Source:World Bank(2024),BCG Analysis,WRI New Zealand WashingtonCalifornia Alberta Saskatchewan Ontario Quebec Newfoundland and Labrador Prince Edward Island Nova Scotia Maine Verm

51、ont New Hampshire Massachusetts New York Ottawa Toronto Pennsylvania Article 6 provides countries with a suite of options to cooperate on emissions reductions targets&engage in cross-border carbon trade STATE OF CARBON MARKETS07Unlocking the Full Potential in Carbon Markets:Pathways to Growth and Su

52、stainability in Asia Article 6.2Article 6.4Article 6.8Market-based mechanism that allows for decentralized bilateral or multilateral trades between countries,governed by countrieswith guidance from UNFCCCInternationally Transferred Mitigation Outcomes(ITMOs).All ITMOs must be authorized for a corres

53、ponding adjustment and avoid double countingEnables host country on track to exceed its NDC target to trade ITMOS in exchange for investments and/or capacity building The buyer country purchases ITMOS to meet its own NDC targetsOperational,with final reporting,monitoring,and transparency mechanisms

54、clarified at COP29Mechanism that allows for market and non-market based trades between countries and companies,governed by UN Article 6.4 Supervisory Body1Article 6.4 Emissions reductions units(A6.4ERs)A6.4ERs can either be ITMOs or mitigation contribution units,depending on authorizationEnables hos

55、t countries to sell credits under standardized,approved methodsThe buyer countries and the private sector can purchase these units to meet NDC targets OR other purposes(i.e.,voluntary carbon markets)In development;project standards and governance rules agreed upon at COP29 after 10 years of negotiat

56、ion;Supervisory Body to launch work on methodologies,registry in 2025UNFCCC-facilitated mechanism to support non-market based approaches(inter alia finance,technology transfer,capacity building),where no trading of emissions is involvedNo carbon credit unit exists under Article 6.8.as it focuses on

57、non-market mechanismsConnects countries seeking mitigation support and those offering support/technical to efficiently deploy funds and technology support without expectation of trading unitsA work program for non-market approaches was established at COP29,but implementation mechanisms are still und

58、er developmentDESCRIPTIONCARBONCREDIT UNITOBJECTIVESCURRENTSTATUSCountries have the option to a.)Import cost-effective/high-quality carbon credits to achieve NDC2 and/or b.)Export extra carbon credits to capture proceeds1.(also known as Paris Agreement Crediting Mechanism(PACM)2.Nationally determine

59、d contribution Source:UNFCCC,The Nature Conservancy;BCG analysis 3 emerging trends will help accelerate the flow of capital into carbon removal activities Industry specific commitments will increase demand across all competitors in a given market and establish agreed standards Increased volumes of c

60、redits in compliance schemes provide higher price realization and government oversight Coalitions of corporate buyers,such as Lead Coalition,NextGen,Frontier,and Symbiosis,bring larger pools of capital to meet aspirational commitments,often focusing on long-dated methodologies and driving collective

61、 impact in achieving sustainability goals.Airlines have committed to holding emission growth flat,with the Carbon Offsetting and Reduction Scheme for International Aviation(CORSIA)playing a critical role in driving material future demand for high-quality credits.Governments,including California,Cana

62、da,and Singapore are allowinguse of removal and avoidance credits to meet some obligations.Corporate coalitions bring capital and provide a level of trust among a number of respected corporates STATE OF CARBON MARKETSBuyer Coalitions Industry Coalitions Govts.Linking Credits into Compliance Markets

63、08Unlocking the Full Potential in Carbon Markets:Pathways to Growth and Sustainability in Asia 09Unlocking the Full Potential in Carbon Markets:Pathways to Growth and Sustainability in Asia Asia is uniquely positioned to lead the carbon credit origination,particularly in NBS,thanks to its rich natur

64、al carbon sinks,abundant agricultural waste,and cost-effective labor.However,the supply side faces hurdles such as fragmentation among small producers and scaling difficulties.For biochar,a key NBScomponent,high initial costs,feedstock scarcity,and a lack of technical expertise among farmers hinder

65、widespread adoption,while uncertified biochar credits add to market hesitancy.Blue carbon,another promising NBS category involving coastal ecosystems like mangroves and seagrasses,provides exceptional co-benefits such as biodiversity enhancement and shoreline protection.Though less mature than other

66、 NBS solutions due to challenges in verification,measurement accuracy,and site availability,blue carbon represents an untapped opportunity for growth in the sector.DAC,a leading engineered solution,offers unmatched permanence and precise measurability by storing carbon in geological formations for m

67、illennia.However,high costs,scalability issues,and the need for renewable energy limit its immediate impact.The absence of standardized quality benchmarks and robust verification mechanisms undermines trust in carbon credit claims,while regulatory uncertainty complicates investment decisions.Despite

68、 these challenges,the future of carbon removal solutions is promising.Investments in robust quality standards,maturing regulatory clarity,and innovative financing models are paving the way for a more scalable and trusted market.As these solutions mature,they promise not only to address the climate c

69、risis but also to deliver significant co-benefits,fostering biodiversity,community welfare,and economic growth.Generating high-quality credits through verified abatement&removals HIGHLIGHTS WORKSHOP 1:SUPPY SIDE10Unlocking the Full Potential in Carbon Markets:Pathways to Growth and Sustainability in

70、 Asia Establish robust,technology-agnosticframeworks to assess and compare the qualityof carbon credits across NBS and engineered solutions.Standardsshould also incorporate non-emission ESG benefits like biodiversity.Make carbon removal credits fungible acrossjurisdictions and pathways.Introduce rig

71、orous third-party verification to ensure market trust and encourage adoption.Facilitate an integratedecosystem where NBS&engineeringsolutions coexist andcomplement each other.Singapore could lead byleveraging its strengths in finance,policy,andtechnological innovation.Provide technical trainingand r

72、esources to localstakeholders to increaseproject sustainability andsocial impact.Address opportunity costs tooptimize biomass utilization.Develop Comprehensive StandardsFoster Fungibility and TrustEnable Ecosystem CollaborationPromote Long-term Demand CertaintyEngage Local CommunitiesDesign thinking

73、 outcomesHIGHLIGHTS WORKSHOP 1:SUPPY SIDEEncourage buyer coalitions and government-backed offtake guarantees to stabilize demand and de-risk investments.Transparent and predictable pricingmodels can further incentivize scaling.What would it take to create an integrated ecosystem in Asia where nature

74、-based and engineered solutions coexist and complement each other in the carbon markets?11Unlocking the Full Potential in Carbon Markets:Pathways to Growth and Sustainability in Asia Historically,internal carbon prices in Asia have been lower than in Europe or the U.S.,but this is changing,driven by

75、 forward-looking companies across APAC.The regions heavy reliance on manufacturing,which is increasingly integrating carbon credits into supply chains,positions it as a significant market for high-quality carbon removal solutions.However,demand for carbon credits remains fragile,as end-customers and

76、 investors express uncertainty about the credibility and long-term value of offsets.While employees and governments are pushing sustainability agendas,stronger regulatory mandates are needed to build momentum and ensure long-term adoption.One critical challenge is the lack of demand,which discourage

77、s investment in carbon removal projects.Offtake agreements that provide predictable demandcovering volumes,timeframes,and pricingcan help reducing the risks for developers and attract investors.Government-led initiatives,such as national funds or compliance markets,can further stimulate demand by pr

78、oviding stable frameworks and incentives for companies.For example,the aviation sector in major aviation hubs could accelerate adoption by equating carbon removal credits with sustainable aviation fuel,setting a benchmark for other industries.As the market matures,a shift toward treating carbon cred

79、its as investable financial assets is crucial.Establishing robust infrastructure for trading,ensuring transparency in standards and monitoring,and fostering trust will make credits more attractive to both corporates and financial institutions.With innovative policies,patient capital,and clear demand

80、 signals,Asia is poised to lead the way in creating a thriving market for carbon credits,driving global decarbonization and achieving meaningful climate impact.View on demand side for high-quality carbon credits ecosystem in AsiaHIGHLIGHTS WORKSHOP 2:DEMAND SIDE12Unlocking the Full Potential in Carb

81、on Markets:Pathways to Growth and Sustainability in Asia Governments couldestablish clear and robust regulatory frameworks that mandate the adoption of carbon credits,particularly in hard-to-abate sectors.Policies such as integrating carbon credits into compliance markets or recognizing them as equi

82、valents to abatement alternatives can drive demand and incentivize corporate participation.Encourage buyer coalitions and government-backed funds to create offtake agreements that guarantee stable demand for carbon credits.These agreements could specify volumes,timeframes,and pricing to reduce risk

83、for project developers and attract private investment.Develop robust infrastructure to support the trading of carbon credits as financial assets.This includes setting transparent quality standards,ensuring reliable monitoring and verification systems,and creating exchange platforms to enableliquidit

84、y and price discovery.Increase pull from key stakeholderscustomers,employees,and investorsby promoting awareness of the benefits of carbon credits.Governments can play a role by encouraging public-private partnerships and offering incentives for companies that integrate sustainable practices into th

85、eir operations.Highlight the additional value of credits that deliver biodiversity and community welfare benefits,particularly from NBS.Such differentiation can drive higher market demand and increase the overall value of carbon credits,ensuring they are viewed not just ascompliance tools but as imp

86、actful investments.Design thinking outcomesHIGHLIGHTS WORKSHOP 2:DEMAND SIDEHow might we catalyze the demand for high-quality carbon credits?Strengthen Regulatory MandatesFacilitate Long-term Offtake AgreementsBuild Market Infrastructure for Trading and TrustEnhance Stakeholder Engagement Incentiviz

87、e Biodiversity and Co-benefitsThe success of carbon markets hinges on creating trust,ensuring liquidity,and fostering scalability.Building trust involves three pillars:confidence in the science of carbon removal,clarity in legal frameworks governing the quality of credits,and robust accounting pract

88、ices for integrating credits into company assets.Trust in ScienceAccurate carbon removal monitoring and verification ensure the credibility of claims,with independent audits providing transparency.Lifecycle assessments help quantify emissions and removal processes,establishing confidence in diverse

89、methods.Trust in Legal FrameworksClear standards for carbon credit quality outline the roles and responsibilities of all parties,ensuring consistency and reliability.Harmonized cross-border rules allow carbon credits to be traded and recognized internationally,enhancing market access.Trust in Accoun

90、ting and AssetIntegrationStandardized accounting practices help companies transparently value and report carbon credits in financial statements.Independent verification of credit usage reassures investors and stakeholders of their legitimacy and impact.Key success factors of carbon markets HIGHLIGHT

91、S WORKSHOP 3:MARKET STRUCTURESThe lack of liquidity in current markets limits price discovery and investor participation.Making carbon credits investable and tradeable assets,with infrastructure like exchange markets and consistent standards,is key to scaling the market.Offtake agreements play a cri

92、tical role in mitigating risk for developers and attracting capital.Aggregating smaller offtakes into sizable commitments ensures demand certainty,which is vital for long-term investment in carbon removal projects.Financing challenges,particularly for capital-intensive projects,require innovative so

93、lutions such as blended finance,which combines public,philanthropic,and private capital to de-risk investments and encourage market participation.The establishment of clear demand signals and quality standards is more important than upfront financing,as clarity ensures consistent and predictable gro

94、wth in the market.13Unlocking the Full Potential in Carbon Markets:Pathways to Growth and Sustainability in Asia 14Unlocking the Full Potential in Carbon Markets:Pathways to Growth and Sustainability in Asia Develop robust verificationsystems and legal frameworks that clearly define the quality of c

95、arbon credits and the responsibilities of stakeholders.This will establish confidence in the market and attract a wider range ofinvestors.Establish exchange platforms where carbon credits can be freely traded,regardless of buyer or investor type.This liquidity will allow for better price discovery a

96、nd foster broader participation from financial institutions,including hedge funds and speculators.Create mechanisms to aggregate smaller offtake agreements into sizable contracts.This ensures stable demand for carbon credits,reduces risk for developers,and provides the long-term cash flows needed to

97、 secure large-scale investments.Provide clear and accessible data on market demand,the number of projects,and buyer commitments.Transparency helps align stakeholders,builds investor confidence,and ensures that projects scale to meet both environmental and economic goals.Build Trust in Market Mechani

98、smsAggregate Offtakes for Demand StabilityDesign thinking outcomesHIGHLIGHTS WORKSHOP 3:MARKET STRUCTURESUtilize blended finance to mitigate early-stage risks for carbon removal projects.Public and philanthropic funds can absorb upfront costs and make these projects attractive to private investors,p

99、articularly for nascent or capital-intensive solutions.How can finance play a catalytic role to accelerate carbon removals?Enable Liquidity Through Tradeable CreditsInnovate Financing ModelsEnsure Market Transparency and PredictabilitySolution case studiesInnovative solutions are at the heart of sca

100、ling carbon removal efforts to meet the urgent demands of the climate crisis.The following case studies highlight pioneering approaches that address critical challenges in carbon markets,from enhancing the credibility and scalability of nature-based solutions to driving cost efficiencies in engineer

101、ed technologies.These examples showcase how diverse stakeholdersentrepreneurs,local communities,and global organizationsare forging impactful strategies to overcome barriers and unlock opportunities.As the carbon market evolves,these projects serve as inspiring examples of innovation in action,setti

102、ng a precedent for what can be achieved when ambition meets execution.Together,they provide a blueprint for scaling carbon removal efforts while delivering co-benefits like biodiversity,economic growth,and community empowerment.15Unlocking the Full Potential in Carbon Markets:Pathways to Growth and

103、Sustainability in Asia 16Unlocking the Full Potential in Carbon Markets:Pathways to Growth and Sustainability in Asia SOLUTION CASE STUDIESBy removing CO,Climeworks transforms a global responsibility into an economic amplifier.2024 will break another record in being the hottest year on record.Global

104、 warmingmust be limited to 1.5C.To maximize our chances of success,the world needs to reach net-zero emissions by 2050.This can only be achieved by reducing emissions and,as well as removing unavoidable and historic CO2 emissions.Climeworks provides holistic carbon removal solutions built on the exp

105、ertise of their gold standard direct air capture so that companies can achieve their net-zero targets.For individuals,the company offers a self-service to remove their CO footprint.With their own direct air capture technology in two commercial plants,Climeworks captures CO from the air and with part

106、ners stores it permanently underground the most reliable and durable way to remove carbon from the atmosphere.Direct air capture technology is one of the key technological solutions to fight the climate crisis.It can scale,is permanent and has no geographical limits.Only with emission reductions and

107、 removals will the world suffer less negative impacts on intensity and frequency of extreme weather events,resources,ecosystems,biodiversity,health,or food security.Macrocarbon helps to defossilize the chemical and aviation industry by producing sustainable hydrocarbons from macroalgae cultivated in

108、 the open ocean.To substitute fossil feedstocks for the chemical industry and fossil fuels for the aviation industry,we need millions of tons of renewable carbon-rich biomass.Land-based biomass requires space,freshwater,and fertilizer to grow,and agricultural waste is limited.Macrocarbon is growing

109、macroalgae in the open ocean at scale to produce biomass at scale in a cost-effective way.The macroalgal biomass is then processed with advanced pyrolysis(gasification).The gas is then transformed to liquid hydrocarbons such as bionaphtha and sustainable aviation fuel(SAF)through Fischer Tropsch tec

110、hnology.The solid outputs sequester carbon permanently in the form of carbon black and biochar that can be used to create carbon negative materialsOpen ocean aquafarms enhance biodiversity and reduce ocean acidification.88%of the carbon sequestered by the macroalgae while it grows ends up in valuabl

111、e products.Macrocarbons impact is 12.000 tons of CO2 equivalents per km2 of aquafarm per year,and there is enough space in the ocean to bring this approach to Gt scale.CHALLENGESOLUTIONIMPACTCHALLENGESOLUTIONIMPACTAt Climeworks we dare to reclaim control of our climate future.Were on a journey to sc

112、ale our carbon removal technology to gigaton capacity,to protect our planet,the only home we have.-Christoph Gebald,Co-CEO and Co-Founder C-Mar Fernandez and Jason Cole,Co-CEOs Macrocarboninspired by Buckminster Fuller and Rafael Laguna de la VeraWe are called to be architects of our future,not its

113、victims.The future belongs to those who act,and we are determined to break the walls to defossilize our industry at scale using the power of macroalgae in the ocean.www.macrocarbon.world17Unlocking the Full Potential in Carbon Markets:Pathways to Growth and Sustainability in Asia SOLUTION CASE STUDI

114、ESArukah unlocks gigaton-scale carbon removal in the Global South with a 50%revenue sharing model to smallholder farmers,operationalised with digital MRV and payments.By 2030,the annual demand for durable CDR is estimated to range from approximately 40 to 200 million metric tons(Mt)of CO,translating

115、 into a market opportunity of$10 billion to$40 billion(BCG).The challenge is not only in unlocking the supply pipeline,but also in achieving a cost-effective portfolio at scale.Arukah works with smallholder farmers in the Global South to convert agricultural waste into biochar-based fertilizer,seque

116、stering carbon in the process.Their revenue sharing model incentivizes sustainable long-term participation by directing climate income to local communities.By providing end to end traceability and transparent real-time data to financiers,we unlock financing at scale.Puro.earth helps to build the car

117、bon removal industry by certifying CO2 Removal Suppliers to power the net-negative economy.To achieve net-zero,deep decarbonization of each sectors economic activities needs to be paired with carbon removal services to neutralize residual emissions.This CDR services sector needs to be scaled exponen

118、tially.Puro.earth is the worlds leading crediting platform for engineered carbon removal,and maintains a high-integrity,transparent standard to certify CDR companies operating in all the major,established methods.Puro.earth certified CDR companies are collectively approaching megaton level carbon re

119、moval capacity by mid-decade,setting the foundation for the multi-billion ton per year(gigaton)capacity neededto enable net-zero by mid century.CDR is the net-negative economy.CHALLENGESOLUTIONIMPACTCHALLENGESOLUTIONIMPACTwww.arukah.financeArukah was established during the pandemic amid predictions

120、that up to 100 million people in Asia could fall below$2 a day,most of whom are farmers.Arukah aims to help them earn more at scale We have identified an opportunity to use carbon markets to finance farmers to process agricultural waste sustainably.While often overlooked,farmers are essential partne

121、rs in theglobal climate transition.-Joanna Yeo,Founder and CEO of Arukah CapitalCarbon removal is a critical service just like the utilities sector.Net-zero is only feasible by pairing this new utility the net-negative economy with the greener activities of every other sector in the economy.-Alvin L

122、ee,Head of Asia-Pacific,Puro.earthwww.puro.earth18Unlocking the Full Potential in Carbon Markets:Pathways to Growth and Sustainability in Asia SOLUTION CASE STUDIESDOEs Carbon Negative Shot has set a target of secure,gigaton-scalable CDR across multiple pathways for under$100/net metric ton CO2-equi

123、valent by 2032.Terraformation is a native forest restoration company dedicated to addressing climate change by rapidly expanding the number of large-scale biodiverse forest projects.Forests are one of the best ways to address climate change,potentially storing over 30%of the worlds excess carbon.How

124、ever,globally,there is a lack of forestry teams with the necessary capacity to plant native forests on the scale the world needs.To scale,they also need capital.Currently,$200 billion flows into nature-based solutions,but the world needs three times the amount by 2030 to meet climate commitments.The

125、 U.S.net-zero strategy calls for greater than 100 million tons of CO2 removal(CDR)each year by 2050,requiring international collaboration to elevate CDR in international climate policy discussions;to build capacity and develop effective regulatory environments in emerging markets;to leverage global

126、capabilities,share knowledge,and fill funding gaps;to promote development of rigorous and consistent carbon accounting regimes and cross-border transport standards;and to catalyze concessionary finance to enable innovation and deployment globally.DOE is investing$3.5 billion for regional DAC hubs;$1

127、00 million for Carbon Negative Shot pilots;and$35 million in CDR advance purchase commitments under the worlds first national government CDR credit purchase initiative.DOE also launched the Voluntary CDR Purchasing Challenge,calling on organizations to purchase high-quality,durable CDR credits.Colle

128、ctively,these efforts will develop the CDR infrastructure,credit quality standards,and market mechanisms to effectively scale private sector demand.Private sector purchases have the potential to catalyze CDR innovation,paving the way for removals to be available in the quantities required to meet bo

129、th corporate net-zero and global climate goals in the coming decades.Several companies have already announced that they will match DOEs$35 million commitment with deals for nature-based CDR and DAC credits.Over 14 teams entered the Seed to Carbon Forrest Accelerator from all over the world in Africa

130、,LATAM,and APAC,incl.two mangrove restoration projects.Up to 12 more teams to be onboarded by the end of 2024,supporting the restoration of nearly 25,000 ha of biodiverse forests,offering economic benefits to the local communities that steward the forests.Terraformation is on a mission to rapidly sc

131、ale up the restoration of native,biodiverse forests by providing solutions that address both sides of this dilemma.Through their Seed to Carbon Forest Accelerator,forestry teams gain expertise in forestry science,native species,community engagement,and carbon markets.They provide software tools,trai

132、ning,and access to capital to help the teams build biodiverse forests for future generations.For investors,their programs and technology deliver a portfolio of high-quality,certified carbon projects that meet investor due diligence criteria.CHALLENGESOLUTIONIMPACTCHALLENGESOLUTIONIMPACTInvesting in

133、forests is more than funding a projectits seeding a future.Native,biodiverse reforestation doesnt just capturecarbon.It restores ecosystems,supports communities,and buildsresilience against climate challenges.”-Huey Lin,Special Advisor to Terraformation -U.S.Department of Energy“To avoid the worst i

134、mpacts of climate change,the CDR industry needs rapid,global ramp-up.But ramping up the CDR industrywill require concerted effort across key areas,including investingin first-of-a-kind demonstrations;creating market demand;and engaging local communities early and often on CDR.”www.energy.gov 19Unloc

135、king the Full Potential in Carbon Markets:Pathways to Growth and Sustainability in Asia Why Singapore has a role to playWAY FORWARDDespite accounting for majority of credit issuance,Asia is a highly heterogeneous region with diverse countries and regulatory environments but lacks a unified orchestra

136、tor,common frameworks,and a centralized marketplace.Heterogenous region as an epicenter of credit issuanceSingapore,as the regional headquarters for numerous multinationalcompanies and financial institutions,can serve as a key bridge to connect private entities(e.g.,potential buyers and industry coa

137、litions)with investors and financiers across the carbon removal and trading ecosystem.Singapores position as a business and financial hubSingapore can lead efforts to shape the regions carbon market by driving the development of robust frameworks,fostering collaboration among governments and industr

138、ies,and leveraging its expertise in governance and finance to ensure credibility and high-impact carbon removal initiatives tailored to the regions needs.Opportunity to spearhead and shape the market20Unlocking the Full Potential in Carbon Markets:Pathways to Growth and Sustainability in Asia ACKNOW

139、LEDGEMENTSThank you for paving the way to unlock the potential of carbon removals Green CircleClimate Forum participating organizationsAuthorsAcknowledgmentsThe authors wish to thank Pauline Wray for her specific contributions to this report as well as organization and programming of the Green Circl

140、e Insights Forum.Further,the authors would like to acknowledge Leila Conners for sparking impactful discussions in the opening fireside chat of the Green Circle Insights Forum and the Asia premiere of her CDR documentary Legion 44(www.legion44.world)during the Singapore Fintech Festival Week 2024.Da

141、niel Oehling BCG Managing Director&Partner Andrey BerdichevskiyBCG Partner&Associate Director,Lead SEA Center for Climate&Sustainability Dr.Gates MossBCG Partner&Associate Director Marc SchmidtBCG Managing Director&Partner AmazonGprntArukah Capital Isometrics U.S.Department of Energy Microsoft NUS P

142、uro.Earth Standard Chartered StanfordUniversity STX TerraformationUBS Climeworks ClimateImpact X EngieGolden Agri-Resources GFTN BCG CaptureNow Carbon RemovalPartners About GFTNGlobal Finance&Technology Network(GFTN)is a not-for-profit organisation established by the Monetary Authority of Singapore(

143、MAS)in 2024 to harness technology and foster innovation for more efficient,resilient,and inclusive financial ecosystems through global partnerships.GFTN organises convening forums,offers advisory services on innovation ecosystems,provides access to transformative digital platforms,and invests in tec

144、hnology startups with the potential for growth and positive social impact through its venture fund.For more information,visit www.gftn.co About Boston Consulting GroupBoston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their gre

145、atest opportunities.BCG was the pioneer in business strategy when it was founded in 1963.Today,we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholdersempowering organizations to grow,build sustainable competitive advantage,and drive positive societal

146、impact.Our diverse,global teams bring deep industry and functional expertise and a range of perspectives that question the status quo and spark change.BCG delivers solutions through leading-edge management consulting,technology and design,and corporate and digital ventures.We work in a uniquely coll

147、aborative model across the firm and throughout all levels of the client organization,fueled by the goal of helping our clients thrive and enabling them to make the world a better place.About Gprnt Gprnt(pronounced greenprint)began in 2020 as Project Greenprint,an initiative by the Monetary Authority

148、 of Singapore(MAS)to streamline sustainability data and drive capital towards sustainable projects.In 2023,Gprnt was launched as an independent entity,backed by public and private stakeholders,to meet global ESG reporting needs.Today,Gprnt offers the Gprnt.ai platform,which helps SMEs,corporates,financial institutions,and governments to collect,measure,and act on sustainability data.We also run Green Circle,an ecosystem of forums,tools,and programs to provide these same stakeholders with the knowledge,solution and collaboration needed to execute on their transition agenda.