A financial exchange offering carbon credits and investments in conservation projects is set to launch in Singapore, but it may struggle to convince sceptics of the value of controversial carbon offsets.
Climate Impact X (CIX) - to be jointly set up by the Singapore Exchange, DBS Bank, Standard Chartered and Temasek - aims to help the growing number of firms seeking to cut greenhouse gas emissions.
From oil majors to tech giants and airlines, firms are lining up to make net-zero pledges, but face challenges in hitting their targets.
They sometimes turn to buying "carbon credits" - allowing them to keep polluting in exchange for reductions made elsewhere or investing in projects like protecting rainforests - to offset emissions.
But such methods are controversial, as environmentalists accuse big business of paying for a quick fix rather than seeking to truly overhaul their operations.
Nevertheless, demand for offsets is skyrocketing, leading to greater efforts to boost carbon markets and fix their poor reputation.
CIX, which is expected to launch by the end of the year, joins a small number of such exchanges that have sprung up in recent times.
But it is betting on Singapore's status as a leading financial hub, as well as its location in Asia, to boost its chances of success.
The region still relies heavily on coal for power, making a high-quality carbon market vital for emissions reductions, said Monetary Authority of Singapore managing director Ravi Menon, as the CIX was announced last month.
In addition, South-east Asia is "fertile ground to harness the potential of nature-based solutions", with abundant mangroves and large areas suitable for reforestation, he added.
The exchange will offer investments in certain conservation projects, as well as trading in carbon credits. Mindful of criticism that it is notoriously difficult to police whether such transactions are getting carbon out of the atmosphere, CIX will use technology like satellites and blockchain to monitor its system.
The exchange is part of the so-called "voluntary" carbon markets, as opposed to mandatory initiatives such as the European Union's Emissions Trading Scheme.
Voluntary markets have boomed in the past year, but industry figures say they will have to grow faster to support investment required to meet the goal in the Paris climate accord.
A private sector task force established last year to boost voluntary markets, unify them and strengthen oversight estimates they will need to expand by 15 times by 2030.
But scepticism abounds, with critics questioning whether playing the financial markets can help.
"Trading a carbon credit back and forth does not benefit the climate," Mr Gilles Dufrasne, policy officer at non-profit group Carbon Market Watch, told Agence France-Presse.
Investing in conservation projects to offset emissions is also "far from ideal", as it can be "extremely difficult" to measure their true impact, he said.
Adding to concerns, there have been horror stories of projects aimed at offsetting emissions that critics say ended up doing more harm than good.
These include a Ugandan forest planting initiative that blocked villagers' access to vital land, and Latin American hydroelectricity projects that worsened conflicts over land rights, according to a study by Carbon Market Watch.
Still, some experts believe carbon offsets can contribute, particularly for polluting industries struggling to hit net-zero targets - but only combined with serious efforts to overhaul business models.
Professor Benjamin Horton, director of the Earth Observatory of Singapore at Nanyang Technological University, said investing in conservation projects could contribute to combating global warming.
But he warned this should be "not instead of, but in addition to, a lot of hard work that needs to happen to decarbonise energy, transportation, agriculture and other sectors of the economy".
AGENCE FRANCE-PRESSE
