(Bloomberg) -- Policy reforms in some of Asia’s largest carbon markets are poised to spur growth in trading activity in Australia, New Zealand and South Korea, according to Hartree Partners LP, a commodities trader.
Australia has been “the most exciting market” since the government announced reforms to a climate policy, which compels more than 200 of the nation’s biggest industrial sites to cut emissions, Vidur Nayar, head of environmental trading for Asia-Pacific at Hartree, said Wednesday at the APPEC conference hosted by S&P Global Commodity Insights.
The policy, known as the Safeguard Mechanism, fixes emission reduction targets for industrial facilities in sectors including mining, oil and gas, and transport and allows them to use carbon credits to meet the targets.
The reforms “add confidence that the emissions trading system is going to grow, should government regulation not change — or not change too much,” Nayar said in Singapore.
New York-based Hartree trades in the New Zealand and Australian markets, though isn’t active in South Korea allowances.
While those three nations operate some of the region’s more developed carbon trading schemes, they’ve typically struggled with weak demand because existing government policies haven’t done enough to push industrial polluters to take action to manage their emissions.
Steps taken by South Korea to widen participation should help boost prices, Nayar said. Earlier this month, the nation announced plans for asset managers, banks, insurers and others to enter the market.
Spot prices of Australia’s carbon credit units have advanced almost 15% this year following action by Canberra to tighten climate policies.
New Zealand’s spot permit prices have also rallied since the start of August, when the country’s government announced plans to tackle oversupply. While that’s offered some stability, price gains are likely to be tepid, according to Nayar.
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