BVRio joins Asia’s first alliance for the expansion of the Voluntary Carbon Market
At an event at COP28, BVRio signed a multilateral MoU, along with other organisations, to mark the formation of Asia’s first alliance for the expansion of the Voluntary Carbon Market (VCM), a technology-based, pre-trade carbon credit market called the ‘Environmental Protection Credit Market’ (EPCM), led by SK Group.
Other participants in this multilateral MoU include SK Inc., SK E&S, ecosecurities, Shinhan Investment Corp, PwC Consulting, the Carbon Reduction Certification Center of the Korea Chamber of Commerce and Industry, Korea Hydro & Nuclear Power, Korea South-East Power Co., Hartree, and the Seoul National University Climate Tech Center, totalling 11 institutions.
The EPCM adopts a new approach, involving pre-trading of carbon credits that are to be issued based on carbon reduction technologies. Traditionally, the VCM has predominantly focused on nature-based carbon reduction initiatives, such as reforestation and forest conservation, issuing ‘carbon offset credits’ only after authenticating the reduction results.
On the other hand, EPCM represents a pre-trading system where certification centres issue EPCs based on the carbon reduction technologies developed by technology firms, and demanders (carbon-emitting companies) purchase these EPCs. Once a technology firm completes a carbon reduction project with the funds obtained from EPCs, the certification centre converts the EPCs purchased by the demanders into carbon emission rights. In essence, this mechanism allows tech firms to secure funding in advance for commercialising their carbon reduction technologies, while demanders have the advantage of offsetting carbon emissions or gaining profit from trading the EPCs they acquired beforehand.
BVRio Director, Pedro Moura Costa, gave a presentation emphasising “the need for tech-based credits as part of the global effort to decarbonise and reach net zero by 2050”.
At the signing ceremony, the signatories of the EPCM MoU announced a collective effort to issue the first Environmental Protection Credits (EPC) in 2024. They also aim to officially launch this initiative at COP29 next year, while expanding their ranks with additional corporate participants. Furthermore, in collaboration with the Korea Chamber of Commerce and Industry’s Certification Center, they intend to develop and expand EPC issuance and trading for 12 promising carbon reduction technologies, including hydrogen production, plastic recycling, and carbon capture and storage.
SK, under the leadership of Chairman Chey Tae-won’s commitment to net-zero goals, has been exploring methodologies to incentivise companies with carbon reduction technologies. As a result, at COP28, SK took a leading role as the facilitator for the EPCM coalition to vitalise the voluntary carbon market ecosystem in Asia. Chairman Chey previously set an ambitious target at the 2021 CEO Seminar to contribute to reducing 200 million tons of carbon by 2030, accounting for 1% of the global carbon reduction target.
In particular, at the MOU ceremony, SK revealed its vision to promote early commercialisation of carbon reduction technologies and invigorate the voluntary carbon credit market by facilitating EPC trading. Based on its technology and certification expertise in the Asian carbon market, which accounts for approximately 60% of global carbon emissions, SK plans to gradually expand into the global market after establishing its carbon reduction capabilities and securing a track record of issuing and trading credits.
Kim Moo-hwan, the head of SK Inc.’s Green Investment Center, stated, “The EPCM will play a crucial role in accelerating the advent of technology-based carbon reduction by incentivising companies with innovative technologies. The EPCM coalition is dedicated to engaging in robust carbon reduction efforts to address the global climate change challenge. The ‘EPCM Alliance’ will strive to address the global climate change challenge facing humanity by promoting active carbon reduction activities,” he added.