Asia-Pacific

Singapore-based Global Carbon Credit Exchange Planned

Climate Impact X to address need for high-quality carbon credits and promote active cross-border trading of such credits to drive global price transparency.

DBS Bank, Singapore Exchange, Standard Chartered and Temasek have announced plans to develop a new global exchange for carbon credits.

“Global efforts to address climate change have been driving demand for solutions to help corporates effectively reduce their carbon emissions,” said a joint statement. “However, today’s low-carbon technologies including current renewable energy solutions are unlikely to be enough in the near term.”

Specifically, research shows that such technologies may only reduce two-thirds of global emissions, which may not be sufficient to achieve the goal under the Paris Climate Agreement to limit global warming to 1.5 degrees Celsius.

The new exchange, to be established through a new joint venture known as Climate Impact X (CIX), aims to provide organisations with high-quality carbon credits, providing a practical solution to bridge this gap and help to address hard-to-abate emissions.

CIX will connect an ecosystem of partners, leveraging satellite monitoring, machine learning and blockchain to enhance transparency, integrity and quality of carbon credits and deliver tangible and lasting environmental impact.

The initiative is expected to increase transparency over the risks and effectiveness of carbon projects, as well as improve price transparency, which will help to address challenges suppliers face in developing new carbon reduction projects, including liquidity issues.

“Climate Impact X will provide a solution for corporates to address unavoidable carbon emissions in the near term and propel the development of new carbon credit projects worldwide,” said DBS Chief Sustainability Officer Mikkel Larsen, who is serving as Interim CEO of CIX.

“With an initial focus on Natural Climate Solutions [NCS], the carbon credits will also create impetus to address another grave risk of biodiversity loss and help serve local communities.”

To start with, CIX will focus on helping to catalyse the market for NCS, which involves protection and restoration of natural ecosystems such as forests, wetlands and mangroves.

CIX will feature carbon credits from various high-quality NCS projects around the globe on its platforms. It is also in conversations with global rating agencies to provide independent ratings to these projects.

By end 2021, CIX will launch an Exchange that will facilitate the sale of large-scale high-quality carbon credits through standardised contracts – catering primarily to MNCs and institutional investors.

In addition, a Project Marketplace will be launched, offering corporates a curated selection of NCS projects that can help meet their sustainability objectives. Each project will be supported by transparent environmental impact, risk and pricing data.

CIX will be guided by an International Advisory Council – an independent expert body comprising non-governmental organisations, leading corporates and project developers, and academics and thought leaders.

It will also work with an ecosystem of global partners and international working groups, including the Taskforce on Scaling Voluntary Carbon Markets (TSVCM) and the Natural Climate Solutions Alliance, to align on leading standards for quality and integrity.

The joint operation of CIX by DBS, SGX, Standard Chartered and Temasek will be subject to regulatory approval.

CIX will be headquartered in Singapore and leverage the country’s internationally-recognised financial, legal and commodities hub infrastructures – which are foundational to nurturing a trusted ecosystem of partners required to scale the global voluntary market.

Singapore has to date been supportive of initiatives that strengthen the trust and verifiability of carbon credits, as part of its ambitions to become a global carbon services and trading hub.

In 2019, Singapore introduced a carbon tax of SGD 5 per tonne of greenhouse gas emissions, to establish the principle of a price on emissions. The original intention was to gradually raise the tax from 2023 onwards to between SGD 10 and SGD 15 per tonne of emissions by 2030, however the government is now reviewing this to ensure the carbon tax provides sufficient impetus for emissions reduction and restructuring towards a greener economy.

The CIX initiative was born out of Singapore’s Alliance for Action (AfA) on Sustainability, which aims to position Singapore as a hub for carbon-related services and nature-based solutions, transforming the country into a “Bright Green Spark”.

The AfA is part of the Emerging Stronger Taskforce (EST), which was formed under the Future Economy Council in May 2020 to review how Singapore can stay economically resilient, and build new sources of dynamism to emerge stronger from COVID-19.

 

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