A global blockchain-based carbon exchange was launched yesterday, offering a marketplace for airlines and other corporate buyers to trade securitised carbon emissions.
The AirCarbon Exchange, by Singapore-based company AirCarbon, will provide a ready supply of credits called eligible emission units (EEUs) for those in the transportation industry to acquire carbon dioxide (CO2) offsets for compliance and voluntary purposes when the list of compliant units is approved.
AirCarbon is applying for the recognised market operator licence and aims for the exchange to be fully operational next year.
The carbon credits will be securitised into tokens using blockchain technology, making them highly liquid, fungible and tradable, said AirCarbon.
Each tradable token will be backed by one equivalent tonne of carbon credits.
The company also has the AirCarbon Registration Facility, which provides grants to finance the registration, consulting, issuance and audit fees of CO2-mitigating projects. In exchange for these grants, project developers must commit to list and transact their resulting credits on the AirCarbon Exchange.
The exchange is a collaboration with the Sustainable Energy Association of Singapore (Seas) and supported by Enterprise Singapore.
Mr Edwin Khew, Seas' chairman and AirCarbon's chairman and co-founder, said: "We aim to make the AirCarbon token the easiest and most streamlined instrument for the trading of EEUs globally."
He said this will be the world's first global blockchain-enabled, multi-stakeholder carbon trading hub, representing trades worth over US$100 billion (S$136 billion).
Senior Minister of State for Trade and Industry Koh Poh Koon minted the first AirCarbon digital token at its launch during the Asia Clean Energy Summit 2019, which is part of Singapore International Energy Week 2019.
Mr Satvinder Singh, assistant chief executive officer of Enterprise Singapore, said international regulations and the increased focus on sustainability will lead to greater demand for carbon offsetting activities globally.
"Enterprise Singapore stands ready to support solutions providers like AirCarbon to grow in Singapore and address the needs of corporates to offset their carbon emissions, starting from the aviation industry."
The commercial aviation industry accounts for more than 2.5 per cent of total CO2 emissions, AirCarbon said.
Correction note: An earlier version of this article stated that the carbon credits will be approved by the International Civil Aviation Organisation's (ICAO) carbon offsetting and reduction scheme for international aviation (Corsia). ICAO has clarified that there are no emission units eligible or approved under Corsia yet as the council has not made a decision on the matter.