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Bank-backed Carbonplace, CIX collaborate for blockchain-based carbon trading

carbon credits c02

Last week, Carbonplace and Climate Impact X (CIX) announced that they are teaming up to create a pilot for a seamless blockchain-based platform for voluntary carbon credit trading.

Major institutions back both projects. CIX was founded by DBS Bank, the Singapore Exchange (SGX), Standard Chartered and Temasek to create a marketplace of projects where corporates can buy carbon credits.

If one thinks of securities trading, some institutions provide trading or marketplace platforms, while others offer post-trade and settlement. That’s where Carbonplace comes in. It was founded last year by NAB, CIBC, Itaú Unibanco and NatWest, and this year they were joined by another three banks, BNP Paribas, Stanchart and UBS. It expects to go into production towards the end of this year.

The organizations will combine their respective strengths to help customers buy, trade and settle carbon credits in a market that is expected to experience a hundredfold increase in global demand before 2050.

Carbon credits allow businesses to monetize their climate mitigation actions and allow consumers to invest in projects which prioritize sustainable practices. However, carbon credit markets and trading are still considered complex and inaccessible to most investors and companies due to the vast number of trading options and lack of verification of some credits.

Carbonplace and CIX are collaborating to pilot a platform that combines both of their expertise. CIX’s high-quality marketplace of credits will allow customers to choose between a selection of verified carbon credits that they can trust. Meanwhile, Carbonplace’s novel settlement technology, wide client base, and high regulatory standards will comprise the settlement platform.

“The collaboration between Carbonplace and CIX, through Project Marketplace, brings together easy access to curated, quality credits and a settlement system underpinned by transparency and integrity,” said Mikkel Larsen, CEO of CIX. “It is precisely the type of accelerator we need for scaling up the voluntary carbon market.”

By working together, the two organizations hope to provide more trust and transparency to the carbon trading arena, which can be susceptible to double-counting of credits.

While SGX is involved in CIX, in Europe the Deutsche Börse has just made a significant investment in another blockchain carbon trading marketplace, AirCarbonExchange. The startup uses a conventional trade matching engine, but the carbon credits are tokenized in the public Polygon blockchain.

Hedera, another public DLT, has just created a $100 million fund for climate-related projects. DBS is a backer of CIX and on Hedera’s governing council.

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