Metrobank, Sumitomo Mitsui tapping RP carbon credit market

The Metropolitan Bank & Trust Co. (Metrobank) has signed a memorandum on business collaboration with Sumitomo Mitsui Banking Corp. (SMBC), a wholly-owned subsidiary of Sumitomo Mitsui Financial Group Inc., one of Japan’s largest listed banks, for possible carbon credit business in the country.

The memorandum aims to promote the exploration and development of Clean Development Mechanism (CDM) projects in the Philippines, supported by Metrobank’s strong client base and SMBC’s technical expertise and extensive overseas network.

The CDM is a market-based system provided under the Kyoto Protocol designed to assist and encourage countries to implement projects that reduce greenhouse gas emissions. Under the CDM, companies in the Philippines can earn “carbon credits” by implementing energy efficient and renewable energy projects. These credits can be exchanged for cash in international markets at prevailing market prices.

Since August 2005, SMBC introduced many CDM projects to Japanese and European governments and corporations that need to acquire carbon credits to comply with their mandates under the Kyoto protocol.

“The tie-up with Metro-bank is in line with our plan to accelerate business especially in Southeast Asia region,“ Hiroyuki Kakita, SMBC general manager of the Environmental Products Department in Tokyo, said in a statement. SMBC is continuously expanding its network to explore CDM projects with its partner banks in Europe, South America and Russia.

Under the agreement, SMBC will disseminate the CDM concept to Metrobank’s employees and clients. From its client base, Metrobank will explore potential CDM project that can be presented to SMBC for evaluation.

“Japan has a big demand for carbon credits, and is looking at countries such as the Philippines from which to source these credits,” explained Metrobank executive vice president Vicente Cuna, Jr. “Further, with the recent passing of the country’s Renewable Energy Bill, more companies are expected to venture into CDM projects to take advantage of the tax breaks and other perks available to renewable energy projects.”

Under the collaboration, Metrobank and SMBC seek to provide the opportunity and the technical support to help clients, especially in the renewable energy sector, benefit from the additional revenues that carbon credits can bring to their businesses.