Global carbon exchange Climate Impact X to launch from Singapore

DBS Bank, Singapore Exchange (SGX), Standard Chartered Bank and Temasek announced on 20 May 2021 the establishment of a joint venture, Climate Impact X (CIX), to develop a global carbon exchange that will be headquartered in Singapore.

This initiative reflects the expected growth in demand for voluntary trading in carbon credits and, in particular, the need for high quality carbon credits. A key concern regarding the quality of carbon credits has been with ensuring sufficient transparency and monitoring. To address such concern, CIX is looking to leverage on technologies such as satellite monitoring and blockchain.

Two separate platforms are expected to be launched by end 2021. One is the Exchange which is intended to facilitate the sale of carbon credits through standardised contracts, and the other is the Project Marketplace which is intended to offer a more bespoke selection of projects.

The focus of CIX will initially be on natural climate solutions. It remains to be seen whether this will eventually also include other solutions, in particular engineered solutions such as carbon capture technologies, which are still in an early stage of commercialisation.

The issue of carbon offsetting itself is still a subject of extensive discussion, including with regards to the types of offsets that should be traded, how these should be accounted for and the types of persons who should be allowed to buy them. It will be interesting to see how CIX continues to develop against the backdrop of those ongoing discussions.