Bursa Malaysia under investigation over renewable energy certificate auctions linked to human rights abuses | News | Eco Business

In a statement, Rimbawatch said there was an “urgent need” for BCX and its buyers to improve their eligibility criteria for environmental certification.

Bursa Malaysia responded by saying it has “leading and globally recognised” standards for carbon credits and RECs. Carbon credits on its platform are certified by Verra, the world’s largest carbon credit certifier, while RECs traded on the exchange are certified to the I-REC standard, a global standard for renewable energy certificates, the exchange said.

“BCX is committed to promoting environmental assets that foster sustainable solutions to be traded on our trading platform,” the organisation told Eco Business in a statement.

“End REC Greenwashing”

Bursa Malaysia launched BCX as the world’s first Shariah-compliant carbon credit exchange in December 2022. The platform got off to a slow start in its first year, prompting Malaysian politicians to call for companies to buy more carbon credits traded on BCX to prove their sustainability efforts.

Today marks the first auction of BCX RECs. The auction of forest-based credits from the Kuamut Rainforest Conservation Project in Sabah, which has been creating buzz among market players due to its high external rating as well as additional multiplier benefits for communities and biodiversity, is scheduled for July.

In its criticism, Rimbawatch said the Southern Cardamom Project Stopped by Vera Investigations found that indigenous communities living in project areas in southern Cambodia had been forcibly evicted.

Since the project was suspended, June 2023Bursa Malaysia confirmed that no new carbon credits from Southern Cardamom have been recognised by BCX. Climate ImpactX, Singapore’s voluntary carbon marketplace, stopped trading of carbon credits from the project in December 2023.

The Murumu Dam faces similar concerns to the Southern Cardamom Project, with Rimba Watch saying that dam construction began before communities were involved, violating the indigenous Penan and Kenyan peoples’ right to Free, Prior and Informed Consent (FPIC).

The 944-megawatt dam, operated by Sarawak Energy, has submerged 24,500 hectares of forest and forced the relocation of 1,500 indigenous people. Critics say the Murum reservoir is also a significant source of methane, a potent greenhouse gas.

In an open letter published today, Rimba Watch called on BCX to halt trading of Murmu Dam’s RECs on its platform. “Stop the greenwashing of RECs. Suspend Murmu Dam’s RECs and other questionable projects from the Bursa Carbon Exchange,” the non-profit group said.

The letter, which questions whether the dam will be effective in reducing emissions, was signed by 54 organisations, including Save Rivers, the Orang Asli Centre and Greenpeace Malaysia.

Bursa Malaysia: RECS market will drive climate action

Bursa Malaysia said in its response that both the carbon market and the REC market “play an important role in catalysing and accelerating climate change mitigation efforts by enabling the flow of finance from the private sector”.

“The important reality to bear in mind is that while the science on environmental assets is not yet perfect, given the urgency of the climate challenge the world currently faces, Bursa Malaysia, in collaboration with key stakeholders, has a role to play in taking climate action today.”

Petronas said it supported the development of Malaysia’s voluntary carbon market, which it said “aims to become an important instrument for financing high-quality, good-integrity nature-based climate change solution projects”.

“These projects will need to be verified, certified or authenticated by an independent third party and could have a significant impact on climate change action both in Malaysia and abroad,” the report said.

The oil major added that it was “encouraged” by the development of more rigorous integrity standards through the work of the Integrity Council for Voluntary Carbon Markets (ICVCM), an industry umbrella group that has scrutinized the standards of Vera and other carbon project certifiers.

The second auction of BCX was launched amid a global downturn in voluntary carbon markets, which have seen their value fall following a research report alleging that Verra-certified carbon credits overestimate the climate impact of projects.

Malaysia’s environment minister said in October that “unwarranted skepticism” about carbon markets should not cloud climate change efforts, and warned that there would be “a lot of trial and error” in the development phase of Malaysia’s carbon market.

An earlier version of this article stated that this was the second time carbon credits have been auctioned on BCX. Today’s auction marks the first time renewable energy credits have been auctioned on the platform.

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