Renewables & Climate Change: An Overview of Carbon Market

AvantFaire Investment Management Limited and China Daily Asia Leadership Roundtable co-organized a webinar on “Renewables & Climate Change: An Overview of Carbon Market”” on August 31st which was the second of the impact investment series in 2021. There were about 250 delegates registered for the event with a diversified background including international organisations, business leaders, investors  and media. Dr. DJ Clark, the Multimedia Director of China Daily Asia Pacific, moderated a roundtable discussion with the panelists below to share their insights on the topic:

  • Dr. Erik Berglof, Chief Economist, Asian Infrastructure Investment Bank
  • Ms. Catherine Chen, Founder and CEO, AvantFaire Investment Management Limited
  • Ms. Grace Hui, Head of Green and Sustainable Finance, HKEx
  • Mr. Ma Jun, Founding Director, Institute of Public and Environmental Affairs
  • Mr. Pascal Saint-Amans, Director of Centre for Tax Policy and Administration, OECD

Incentives needed

Dr. Berglof reckoned the progress made on the carbon market and exchanges is slow. “Incentives are needed to spur industries that are most responsible for carbon emissions to make a real change, and doing away with the fossil fuel subsidies is the first step. China’s ETS market, which made its debut on July 16, is believed to be the world’s largest carbon trading market, “ he added. In China, the ETS program aims to slash carbon dioxide emissions by requiring covered entities to pay for emissions, and invest in technologies that will enhance fuel efficiency and reduce pollution. Ma Jun expected China’s ETS market to have a smooth start but believed the current price of carbon emission is not enough to send the incentives for companies to cut their emissions seriously. Catherine Chen echoed that the focus should be not on how much the pricing is being increased but how fast it is being raised. She stressed that private entities should understand why the carbon market is important, their corporate responsibilities on emission-cutting, and the importance in getting bilateral feedback between participants and policy makers.

Stable price signal urged

Pascal Saint-Amans highlighted the importance of a stable price signal in carbon pricing. “ If you have peaks at 100 euros ($118), then it goes down to 10 euros, and it is not stable, that will send the right signal to investors. The price signal is not yet there to push into the right direction of green investment and green recovery.” Ma Jun observed the need of a good governance structure and a global standard to create a vibrant, transparent and high integrity voluntary carbon market. “The most important issue is for the government to try to build the right governance structure. If you do not have a proper governance structure, then you cannot have a functioning market to elicit greater and broader participation that leads to a major impact on emission trading,” he mentioned. Grace Hui noted the different standards in the existing voluntary carbon markets that make the carbon credits not fungible, and the importance of having a standard, a global framework to determine the core carbon principles of a carbon credit that ensures high quality and high integrity standards across removal and avoidance or reduction credits. She also highlighted the need in setting up a global governance body to strengthen the oversight of voluntary carbon markets.

About AvantFaire

AvantFaire was established in 2017 in Hong Kong as a licensed impact investment boutique. The company is a new breed of impact investment specialists in Hong Kong, and probably in the greater China region, where impact investing is yet to be a fully defined concept. AvantFaire specializes in a single theme which is impact investing. The mission of the company is to bring impact investment opportunities to investors in Asia and to act as a role model in impact investing. AvantFaire aligns its investment theme with the United Nations’ Sustainable Development Goals and strives to create measurable impact through making private equity investment. Apart from being the 100th signatory to the Operating Principles for Impact Management in June 2020, AvantFaire is also a signatory to the Principles for Responsible Investment which show the company’s pursue in operating standard and commitment in this field. AvantFaire currently has three business lines in impact investment – managing an impact investment fund of funds, advising on impact investing discretionary mandates and providing impact investing external asset management services to professional and accredited investors in Asia.

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