Prices in the global carbon market are too low to provide an incentive for Cambodian businesses to engage in carbon offset schemes, but there are other options for businesses to gain funds for emission reduction, industry experts say.
Speaking on the sidelines of a two-day educational workshop on carbon markets at the Sunway Hotel in Phnom Penh yesterday, Dr Paul Dargucsh of the International Energy Centre said carbon trading was not economically viable in the current market climate. Dargusch says said carbon offsets – where companies sell their carbon savings to buyers whose emissions are capped – would be challenging in the current business climate, given prices are a mere $5 per tonne.
“So under the current market conditions, it’s a tough business, the numbers don’t quite stack up.”
Dargusch says the slowdown in Europe, an oversupply of offsets from emerging markets at a time when prices were high and international disparities on the politics of climate change had seen prices fall from as high as $30. Still, local industries are hopeful.
Members of Cambodia’s rubber sector were keen to learn of possible benefits for off-setting emissions in the production process.
Yin Song, director of the Rubber Research Institute of Cambodia, said members want to know “how to calculate carbon in rubber . . . and to know how we can sell the carbon.”
Dargusch says initiatives such as the UN-backed Green Climate Fund, whose funding options are not restricted to carbon reduction, provide alternative incentives while waiting for prices to return to viable levels.
“If you look at the broad climate policy frameworks, we have the market based ones in one place, and the green climate fund is deliberately positioned outside of that”
Sarah Sitts of international NGO PACT, which works closely with community forest groups ìn Cambodia’s Oddar Meanchey province as part of a UN-backed carbon trading scheme, insists that there is a market for the purchase of carbon credits, albeit a voluntary market.
Buyers on the voluntary market work through the government as the credit seller, but Sitts said that often entails slow sales turnaround.
“One key issue for sales is a need for the Royal Government of Cambodia decision-making structures that allow the Forestry Administration [credit seller] to move quickly to confirm sales to buyers who want to purchase credits, as offers are only valid for fixed periods of time, and this has been a challenge to date.” Sitts said.
Additional reporting Rann Reuy