DBS, SGX, Standard Chartered and Temasek launch carbon exchange

DBS, Singapore Exchange, Standard Chartered and Temasek are developing a global exchange and marketplace for the buying and selling of carbon credits.

  • DBS Group Holdings Ltd (SGX: D05) and Singapore Exchange Ltd (SGX: S68) share price both rose nearly 1% on Friday (21 May 2021)
  • Both companies, along with Standard Chartered and Temasek have entered a joint venture to develop Climate Impact X (CIX)
  • CIX is a global exchange and marketplace for the buying and selling of ‘high-quality’ carbon credits
  • The platform will use satellite monitoring, machine learnings and blockchain technology to enhance carbon credit offerings
  • Buy and sell DBS and SGX stocks with an IG account

New global exchange to facilitate sale of carbon credits

DBS Bank (DBS), Singapore Exchange (SGX), Standard Chartered and Temasek have jointly established Climate Impact X (CIX), a global carbon exchange and marketplace to be headquartered in Singapore.

CIX will leverage satellite monitoring, machine learning and blockchain technology to enhance the transparency, integrity and quality of carbon credits in a bid to ‘help deliver tangible and lasting environmental impact’.

It also aims to offer distinct platforms and products that cater to the needs of different buyers and sellers of carbon credits. These include the Exchange and the Project Marketplace, which are expected to be launched by end 2021.

The Exchange will facilitate the sale of large-scale high-quality carbon credits through standardised contracts – catering primarily to multinational corporations and institutional investors.

In addition, the Project Marketplace seeks to cater to a broader spectrum of corporates seeking to participate in the voluntary carbon market, offering them a curated selection of natural climate solutions (NCS) projects that can help meet their sustainability objectives.

Each project on the Project Marketplace will be supported by transparent environmental impact, risk and pricing data.

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

NCS are said to be ‘cost effective and provide significant benefits by supporting biodiversity and generating income for local communities’. Asia houses a third of the global supply potential and is one of the largest suppliers of NCS globally.

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.

Why carbon credits can help to reduce global emissions

Global efforts to address climate change have been driving demand for solutions to help corporates effectively reduce their carbon emissions.

However, today’s low-carbon technologies including current renewable energy solutions are unlikely to be enough in the near term, according to a joint press release.

Certain research shows that such technologies may only reduce two-thirds of global emissions, which may not be sufficient to achieve the goal under the 2015 Paris Climate Agreement to limit global warming preferably to 1.5 degrees celsius.

High-quality carbon credits can provide a practical solution to bridge this gap, especially in the near term, and will play an important role in a holistic climate mitigation strategy.

Mikkel Larsen, Interim CEO of Climate Impact X and Chief Sustainability Officer at DBS, said: “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.

‘With an initial focus on NCS, the carbon credits will also create impetus to address another grave risk of biodiversity loss and help serve local communities. CIX will build on collective action by global governments, corporates and individuals to achieve a net-zero economy.’

DBS Group shares opened 0.8% higher on Friday following the announcement. Meanwhile, SGX also saw share price rally by the same amount.

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