Singapore needs both quality and quantity to win the carbon-trading race

SINGAPORE has spent the better part of a decade positioning itself to become Asia’s largest carbon-trading hub, in the face of stiff competition from Tokyo and Hong Kong. It is currently leading that race, with the recent opening of a long-planned carbon exchange and upcoming rules to let local companies buy internationally-sourced credits to offset emissions.

But even if Singapore looks like a good bet to emerge as the biggest and most internationally connected regional player, just how large, lucrative and effective can its carbon market be?

Much will rest upon a key question: Is carbon trading going to be a classic commodities market, where all products are essentially the same? Or more like a stock market, where variety drives trading activity and portfolio construction?