OCBC Bank links up with digital MetaVerse Green Exchange (MVGX) to develop green financing using tokenized carbon credits.
The Singapore-based bank indicated on Monday it would work to develop green financing products using tokenized carbon credits with digital exchange MVGX, a step that would help large companies offset their carbon-based emissions.
The credits will be called MVGX Carbon Neutrality Tokens (CNTs), and they will use distributed ledger technology to keep updated records of climate action projects, both companies said in a press release.
The use of carbon credits to mitigate climate change has become increasingly popular, particularly in industries such as shipping, steel, and energy, where it has traditionally been difficult to directly cut emission levels. Instead, by purchasing the credits, such companies would be investing in environmentally friendly projects, including ones in renewable energy. Ultimately, that should help to reduce overall pollution levels.
Demand Growth
The demand for carbon credits could rise by 15 times or more by 2030 and by up to 100 times by 2050, with the market potentially valued at more than US$50 billion in 2030, according to a January 2021 report from consulting firm McKinsey & Co.
Tracking credits accurately in a way that prevents double-counting and cross-border trading issues has been difficult, OCBC and MVGX noted. CNTs will mitigate this by more accurately measuring emissions and corresponding offsets. Part of that will involve an independent party verifying expected carbon emissions from specific projects to calculate the credits needed.
MVGX is licensed by the Monetary Authority of Singapore (MAS) as a market operator, the release said.
Correction: This story has been updated to indicate the agreement is to develop green financing using carbon credits.
