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      The significance of carbon markets, especially the voluntary carbon markets (VCM), has never been greater. While currently unregulated, VCM allows private parties to trade carbon credits, representing actions that prevent, reduce, or remove greenhouse gases emissions.

      As the demand for carbon credits has grown, concerns have emerged about the integrity of the credits on the VCM.

      This report draws insights from KPMG in Singapore’s second instalment of the  “Race to Zero” series of discussions, where our speakers discussed the topic of Empowering and Expanding Trusted Voluntary Carbon Markets. 

      The report highlights potential tech-driven approaches to enable the VCM to operate more efficiently, reliably, and accurately on a larger scale through integrating emerging technology solutions such as blockchain, artificial intelligence (AI), and remote sensing. This would help create more robust monitoring, reporting and verification (MRV) systems. The report provides specific recommendations to guide key VCM stakeholders as they navigate the evolving VCM landscape, before concluding with a view to the future of VCM.

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      How can we scale a trusted voluntary carbon market?

      Insights from ‘Race to Zero: Empowering and Expanding Voluntary Carbon Markets’. Event organised by KPMG in Singapore on 24 October 2023
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      The carbon opportunities

      VCM has gained momentum over the past two decades, yet significant growth remains to be unlocked

      Conservative estimates that VCM is currently valued at USD5 billion and is expected to grow to 30 billion in 2030. This illustrates the growing recognition of environmental responsibility and commitments made by companies worldwide to achieve net-zero emossion targets and invest in decarbonisation efforts.

      Purchasing carbon credits may help companies in boosting their competitive edge among customers and asserting their carbon-neutral status. In due course, companies will face growing expectations to exhaust all available options in mitigating their emissions before considering the use of carbon credits.

      Asia as an oasis for opportunities

      At present, most of the available carbon credits are supplied from the Global South. Asia, with its rich biodiversity and growth potential, is uniquely positioned to contribute to the VCM as a major supplier of carbon credits. 

      Furthermore, the region is witnessing the emergence of new carbon exchanges in response to growing pressures and attention for more VCM. Currently, Singapore stands as a key player in the Asian VCM landscape, hosting platforms such as Climate Impact X (CIX), positioning the nation as a prominent carbon trading hub.

      Technology as a VCM enabler

      A dynamic and trusted VCM needs to be able to price carbon credits fairly and accurately for its quality. Having granular and updated project performance data will not move the needle if broader market access to the data remains challenging and costly.

      Addressing information asymmetry about a credit’s underlying quality and performance is where technologies such as blockchain, AI, and remote sensing come into play. These technologies offer promising solutions that can enhance trust, liquidity, fairness, and reduce transaction costs.

      Blockchain provides a transparent and immutable record of a carbon credit’s entire history, linking up individual data systems that were once siloed. Blockchain also promotes accurate accounting practices, making transaction data accessible and enhancing accountability among parties.

      Additionally, blockchain has the potential to enable faster, real-time settlements and introduce verification layers through smart contracts.

      Various initiatives which assist early-stage and smallholder project developers in listing their carbon projects and making forward claims based on the expected impact of their projects are underway.

      Conversely, technological tools such as remote monitoring and verification, as well as blockchain can help project developers to reduce project development duration and costs. Blockchain technology, beyond enabling data transparency for the carbon credits, can also empower project developers by allowing direct transactions of these credits, eliminating transaction intermediaries, and thus improving trade efficiency.

      Beyond climate change, carbon credit projects play an important role in other aspects such as biodiversity conservation and social and community development. Furthermore, technology is an important tool for players in the VCM to leverage on and quantify these broader co-benefits, so companies have due comfort when participating in the VCM.

      Download the full report to uncover more recommendations for corporate buyers, project developers and regulators to navigate the evolving VCM landscape

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      Our Insights

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      Our People

      Leon Ong
      Leon Ong

      Partner, Financial Services Consulting

      KPMG in Singapore

      Cherine Fok
      Cherine Fok

      Partner, ESG Consulting and Partner-in-Charge, Our Impact Plan

      KPMG in Singapore

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