A $5.4b cautionary tale on carbon credits

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Hi there,

For a lot of people, carbon credits seemed too good to be true.

It seems increasingly possible that those skeptics are on the right side of history. The value of the carbon offset market is plummeting, and one scam, which is explored in this edition’s Deep Read, saw US$5.4 billion stolen from various governments.

It’s far easier to get excited about climate tech that makes a tangible impact on the environment, rather than the concept that companies can buy licenses to pollute.

There probably is a place in the green transition for carbon credits if well-thought-out regulations are enforced. Hopefully, those in charge of the more nascent carbon markets in this part of the world have learned from the mistakes of older carbon markets.

— Peter

THE BIG STORY

Battery swapping faces uphill climb in Singapore’s EV market

Photo credit: Mo Batteries

Singapore is aiming to fully electrify vehicles by 2040, but EV battery-swapping firms are having a hard time in the city-state.

Mo Batteries recently exited the EV race in Singapore, citing high costs and difficulties in making its business model work in the country’s strict regulatory environment for EV charging.

DEEP READ

The warring conmen at the heart of a $5.4b carbon credit scam

Image credit: Timmy Loen

Greenpeace declared carbon offsets a scam back in 2021, and while the truth is a bit more nuanced, this piece lends weight to the NGO’s argument.

Back when Europe launched its first carbon market in the early 2000’s, criminals discovered it was the perfect opportunity to commit some good old-fashioned value added tax fraud. The full details of how the scheme worked are in the article, but all told, the fraud amounted to a hefty 5 billion euros (US$5.4 billion) being stolen from various governments.

The piece dives into how some of the leaders behind the fraud ended up falling out, a titillating tale to be sure.

More intriguing is what the report says about the carbon markets and how they attempt to make environmental protection part of the market economy. But perhaps all the trading tech in the world can’t do things that less elegant solutions – like higher taxes – may be better equipped to achieve.

TRENDING NEWS

Also check out Tech in Asia’s coverage of Asia’s ecommerce scene here.

1️⃣ Microsoft’s carbon emissions have risen 30% since 2020 due to data center expansion

Global tech giants like Microsoft have been pumping investment into AI tech at a dizzying rate, and it’s become clear that doing so costs more than cash. In 2020, Microsoft announced its goal to be carbon-negative by 2030, but that goal seems further away today than it did four years ago.

Why it matters:

Building and powering the data centers needed for AI applications will be carbon-intensive for a long time, and big firms like Microsoft are investing in this infrastructure around the world, including a US$2.2 billion commitment the US multinational firm made in Malaysia, for example. The bigger question is whether the technology can be effectively harnessed to fight climate change, as many of its proponents believe it can be.

2️⃣ Market value of carbon offsets drops 61%, report finds
After a significant amount of reporting on how little carbon offsets actually do to mitigate the climate crisis, the markets have spoken. The global market for the offsets fell from US$1.9 billion in 2022 to US$723 million in 2023.

Why it matters:

Redirecting investment to technologies and initiatives with a more significant impact on climate change can only be a good thing for the planet – and those making the investments.

3️⃣ Ola Electric eyeing up to 500 job cuts before IPO: report

Ola Electric is eyeing an IPO at some point this year and is also planning to make 400 to 500 job cuts, the Economic Times has reported. The EV maker is waiting for regulatory approval to go public in its native India.

Why it matters:

A successful exit for the investors of Ola Electric would further strengthen the case for backing similar companies. Even if it’s a sad state of affairs that the road to this success may be paved with sizable layoffs.

4️⃣ Biden increases tariffs on $18b in Chinese imports in a new warning to Beijing

President Joe Biden’s administration has boosted tariffs on Chinese imports in several sectors key to combating climate change, including EVs, solar components, battery components, and more. The move is an attempt to prioritize US production of these increasingly important technologies.

Photo credit: Shutterstock

Why it matters:

US government officials have made the point that diversified production of clean tech would be better for the world rather than concentrated in China alone. This is a fair point, though one wonders if Biden et al would have the same opinion if it was US factories currently leading the world in the field.

5️⃣ Gogoro secures $50m to rev up global expansion plan

Gogoro, the Taiwan-based maker of e-scooters and operator of battery-swapping stations, has agreed to a US$50 million funding deal with Gold Sino Assets Limited. The Nasdaq-listed company plans to use the capital to expand overseas and grow in its home market.

Why it matters:

If EV firms like Gogoro can go global after successfully launching at home, rising competition around the world should be a boon for consumers.

STARTUP WATCH

1️⃣ Temasek co-leads $14m round of Singapore agritech firm Rize

Singapore-based agritech startup Rize offers a platform that gathers key agricultural information needed for sustainable farming. This helps rice farmers adapt to climate change, improve their crops, and reduce their environmental impact. The firm landed US$14 million in a series A funding round co-led by Breakthrough Energy Ventures, GenZero, Temasek, and Wavemaker Impact.

2️⃣ Philippine startup raises funds to give used IT devices new life

Humble Sustainability, a Manila-based cleantech startup, has received an undisclosed amount of funding in a round led by Gobi Partners through the Gobi-Core Philippine Fund. The startup helps B2B clients sell used electronic equipment instead of throwing it away.

3️⃣ East Ventures backs $2.7m round of Indonesian climate tech startup

Indonesia-based startup Jejakin has raised US$2.7 million in a funding round, which saw contributions from Indogen Capital and East Ventures, among others. The firm helps businesses calculate their operational emissions, oversee climate actions, and contribute directly to climate change abatement efforts.

Team Jejakin / Photo credit: Jejakin

4️⃣ BaniQL raises $1.6m to make nickel mining in Indonesia greener

BaniQL has raised a US$1.6 million seed round led by Beenext, with participation from Seedstars International Ventures and A2D Ventures, among others. The San Francisco-based startup works to decrease the environmental impact of mining by making nickel products from metal waste and lower-grade nickel ores. It operates in Indonesia, South Korea, Australia, and the Philippines.

5️⃣ India’s Zypp Electric nets $15m to expand EV fleet

Electric-vehicle-as-a-service provider Zypp Electric has netted US$15 million for its series C round from a group of investors led by Japan’s Eneos. The India-based firm plans to use the capital to swell its electric scooter fleet to 200,000 by 2026.

That’s it for this edition – we hope you liked it! Do subscribe to continue receiving The Offset.

See you next month!

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