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Hartree Partners joins alliance at COP28 to develop a new Environmental Protection Credit Market

Vertree Partners (Hartree Partners’ carbon market subsidiary) joins SK Group in announcing the establishment of Asia’s first alliance for the expansion of the Voluntary Carbon Market (VCM).

A multilateral memorandum of understanding ceremony at the COP28 (the 28th Conference of the Parties to the UN Framework Convention on Climate Change) in Dubai, UAE, was held on 8th December. This ceremony marked the formation of an alliance for a technology-based, pre-issuance carbon credit market named the ‘Environmental Protection Credit Market’ (EPCM). Representatives from Vertree were in attendance.

Alongside Hartree Partners, participants in this multilateral MOU included SK Inc., SK E&S, ecosecurities, Shinhan Investment Corp, PwC Consulting, the Carbon Reduction Certification Center of the Korea Chamber of Commerce and Industry, Korea Hydro & Nuclear Power, Korea South-East Power Co., BVRIO, and the Seoul National University Climate Tech Center, totalling 11 institutions.

The EPCM will play a crucial role in accelerating the advent of technology-based carbon reduction by incentivising companies with innovative technologies. The EPCM coalition is dedicated to engaging in robust carbon reduction efforts to address the global climate change challenge.
Kim Moo-hwan Head of SK Inc.’s Green Investment Center

The EPCM, a technology-based pre-issuance carbon credit market discussed at the MOU ceremony, adopts a new approach. Traditionally, the VCM has predominantly focused on nature-based carbon initiatives, such as reforestation and forest conservation, and the trade of ‘carbon credits’ only after issuance. In recognition of the growing urgency to scale all solutions to climate change, and in particular the capital required to scale technology-based ones, this new approach enables investment in future issuances of fully verified technological carbon removal credits.

The EPCM will establish a system where certification centres issue Environmental Protection Credits (EPCs) based on carbon reduction technologies developed by technology firms. Buyers (carbon-emitting companies) can purchase these EPCs. Once a technology firm completes a carbon reduction project with the funds obtained from EPCs, the EPCs are verified and converted into carbon credits to be retired on international registries. In essence, this mechanism allows tech firms to secure funding in advance for commercialising their carbon reduction technologies, while buyers have the advantage of securing future carbon removal credits.

The aim is to officially launch this initiative at COP29 next year, while expanding the ranks with additional corporate participants. Furthermore, in collaboration with the Korea Chamber of Commerce and Industry’s Certification Center, they intend to develop and expand EPC issuance and trading for 12 promising carbon reduction technologies, including hydrogen production, plastic recycling, and carbon capture and storage.

The closing window for action to achieve our climate goals makes it imperative to advance all mechanisms to reduce and remove carbon. We are delighted to join this alliance, which we hope will catalyse investment into technology-based solutions to climate change.
David Costa-D’sa Head of Structuring for Vertree

Under the leadership of Chairman Chey Tae-won and his commitment to net-zero goals, SK has been exploring methodologies to incentivise companies to develop carbon reduction technologies. As a result, at COP28, SK decided to spearhead the EPCM coalition to vitalise the voluntary carbon market ecosystem in Asia. Chairman Chey previously set an ambitious target at the 2021 CEO Seminar to contribute to reducing 200 million tons of carbon by 2030, accounting for 1% of the global carbon reduction target.

Meanwhile SK Inc., SK E&S, and Shinhan Securities will also be joining Hartree Partners as investors in global carbon project developer, ecosecurities. Through this partnership, SK Group has stated its intent to explore diverse carbon projects to contribute to global net-zero, and enhance its capacity to secure high-quality credits, and promote more efficient global collaboration in tandem with the EPCM.

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