INTERVIEW: ASEAN Common Carbon Framework calls for more members, mutual recognition

The ASEAN Common Carbon Framework (ACCF) called for more countries to join its alliance and promote mutual recognition of carbon crediting methodologies between the region's programs and international programs, Renard Siew, the president of Malaysia Carbon Market Association (MCMA), told Platts, part of S&P Global Commodity Insights, in a recent interview.

Currently, ACCF consists of industry associations from four ASEAN countries: Malaysia, Indonesia, Thailand, and Singapore. Siew shared that Malaysia is the current chair of ASEAN; thus, MCMA has also served as the chair of ACCF's Steering Committee. However, next year, the Philippines will assume the chair of ASEAN, and the country has not yet joined ACCF.

"A strong ask is that we really want ACCF, the ASEAN Common Carbon Framework, to be endorsed at an ASEAN level," Siew emphasized, adding that having an ASEAN-level consensus is essential to ensure the continuity of ACCF's work.

"We are hoping to find our counterpart (in the Philippines) very quickly so that we can also pass on the baton to them when they take over."

Siew shared that ACCF has developed a comprehensive work plan encompassing three main work streams: (1) scaling up supply and demand for carbon credits; (2) establishing market infrastructure; (3) collaboratively building carbon market-related capacity.

Work streams

Siew emphasized the importance of enabling the international community to recognize the region's carbon crediting methodologies.

"I think the whole idea of this mutual recognition is really to see where the commonalities are, where the gaps are, and (identify) some of the methodologies that are unique to the region and haven't been officially recognized," he said, adding that Thailand and Indonesia have taken steps to connect with the international markets.

Indonesia has signed a mutual recognition agreement with international carbon credit issuer Gold Standard to coordinate activities across the country's domestic registry and Gold Standard's international registry. Thailand has divided its domestic carbon credits, called T-VERs, into domestic and premium T-VERs, of which the premium supplies are expected to be offered to international buyers, Siew noted.

He also highlighted the significance of blended finance, integrating philanthropic and private sector capital to support and mitigate risks in carbon projects.

"Some of the philanthropic organizations might put upfront capital to support the projects, and in return, when carbon credits are generated, they would be the off-takers. This is a good step in the right direction, because you know that there's certainty of demand that comes out of it," he explained.

He added that ACCF would develop ASEAN-specific guidance on making legitimate claims about the use of carbon credits.

He pointed out that the two main rule setters for the international carbon market, SBTi and VCMI, have not fully aligned their guidance regarding carbon credits. SBTi has not allowed the use of carbon credits for Scope 3 or indirect emissions from a company's value chain. VCMI has allowed the use of carbon credits to address Scope 3 emissions, but carbon credits can only be used to meet up to 25% of their emission reduction targets.

"For ASEAN specifically, we need to have something that's unique for our region," he highlighted, adding that delivering an ASEAN-bespoke guidance would set essential benchmarks and provide clear signals to local corporates.

He stated that they would also evaluate how Article 6-aligned credits could be delivered under the ACCF, adding that they have noted increasing interest and anticipated a price premium for Article 6-aligned credits.

Platts assessed Article 6-aligned, CORSIA-eligible credit at $22.25/mtCO2e on June 3.

Siew added that under the ACCF, they would develop market infrastructure to facilitate carbon trading across various exchanges in the region. In addition, they would collaboratively focus on capacity building, uniting project developers, validation and verification bodies, and financiers into a cohesive regional ecosystem.

Pilot projects

Siew highlighted that developing pilot projects is a crucial catalyst for achieving the ACCF's goals.

Siew mentioned that they are currently evaluating which nature-based and technology-based projects align with ACCF.

"By Q3, when we meet in Bangkok during the Asia Climate Summit (to be held July 8-10), we want to be able to come to some sort of landing to finalize that," Siew disclosed.

Siew emphasized that both nature-based and technology-based removal and reduction projects are essential instruments for decarbonization. He added that nature-based reduction projects hold significant importance in ASEAN, particularly for key suppliers such as Malaysia and Indonesia.

"When you look at the EU, currently the pendulum has swung toward more removal projects."

"Imagine if you have a hotel with 100 rooms, the EU said that, oh, you can only focus on removal. So, you can only rent out 20 of your rooms. For the remaining 80 rooms, you cannot do anything. We don't think it's fair."

Platts' latest assessments showed nature-based reduction credits at $6.5/mtCO2e on June 3 and technology-based removal credits at $155/mtCO2e on June 3.