How Climate Impact X Is Leveraging Nasdaq Technology to Innovate the Voluntary Carbon Market
Climate Impact X (CIX), a global marketplace and exchange for quality carbon credits, will be leveraging Nasdaq’s robust matching technology to power its spot trading platform. The platform will launch in early 2023 for financial institutions and institutional investors around the world.
We spoke with Genevieve Soh, Head of Platforms & Ecosystems at CIX, to learn more about their technology partnership with Nasdaq and how their platform is innovating the voluntary carbon market.
Can you tell us how the idea of CIX came to life and why you wanted to create a platform for trading voluntary carbon credits?
CIX was born out of Singapore’s Emerging Stronger Taskforce’s Alliance for Action on Sustainability, a public-private initiative that aims to position the country as a carbon services hub. This opportunity brought together our shareholders, DBS Bank, Singapore Exchange, Standard Chartered and Temasek.
The voluntary carbon market is a critical and proven mechanism for unlocking liquidity and channeling finance to projects that would not otherwise get off the ground. However, this potential is hampered by historical issues relating to the lack of quality, standardisation and transparency in the voluntary carbon market.
Therefore, CIX emphasises the importance of quality carbon credits when creating trusted platforms that deliver transparent pricing data and clear demand signals. This is still a nascent space, and as part of this developing ecosystem, we believe CIX has an important role in building a community of high-integrity buyers and suppliers to advocate for the responsible use of carbon credits.
Can you tell us about how you’ve approached the Oxford Offsetting Principles?
The Oxford Offsetting Principles advocate for four key elements to credible science-aligned offsetting. We believe these guidelines are critical to driving corporations and institutions to follow a high-ambition pathway that delivers genuine impact while considering both the carbon budget as well as the technical and economic feasibility of available technology today.
CIX recently announced our strategic partnership with Puro.earth to drive market innovation and enable more portfolio diversity in the voluntary carbon market. Our collaboration enables a first-of-its-kind blend of nature- and technology-based removal credits in a single solution, meeting the demand for dynamic carbon credit portfolios that map to the Oxford Offsetting Principles. The principles advocate for a progressive increase in the volume of long-term carbon removal and storage credits to support reaching the global net-zero emission balance in a shorter time.
At its core, our partnership with Puro.earth will unlock a new supply of carbon credits by sending a clear demand signal. It is a unique collaboration that will drive the creation of a science-aligned solution that reduces frictions for businesses and institutions looking to incorporate a blend of curated credits in their portfolios.
How does trading voluntary carbon credits help companies take practical climate mitigation measures?
The voluntary carbon market is one part of the solution to the climate crisis. For example, Nature-based solutions (NBS) can help achieve one-third of the Paris Agreement targets. Beyond financing projects, when done correctly, carbon credits can also drive important biodiversity and socio-economic benefits for local and indigenous communities – by making impactful projects economically viable over the long run. This is what carbon credits are uniquely positioned to deliver.
The responsible use of quality carbon credits can complement direct cuts in a company’s emissions as part of a holistic pathway to net zero. Far from being a least preferred option or last resort, this is a way for companies to take immediate action in addition to, not instead of, decarbonising.
How can market participants get involved in trading on CIX?
CIX’s exchange platform will be launched early 2023 and will enable two-way spot trading via standardised contracts. In March 2022, we launched our marketplace, which is meant for companies that wish to use carbon credits responsibly within their broader climate change mitigation strategies. Our auction platform will launch in the second half of the year and is designed as a mechanism to discover the fair market value of unique or newly issued carbon credits. Interested corporations and institutions may reach out to our team via email@example.com to learn more.
How has Nasdaq’s technology played a role in scaling CIX’s global carbon credit trading platform?
Nasdaq brings unparalleled expertise in trade matching technology, which will enable us to bring exchange-grade trading functionalities to the voluntary carbon market. This will support our efforts to build a spot exchange platform underpinned by quality and transparency and caters to the increasingly complex needs of buyers and sellers of standardised contracts.
Ultimately, our technology partnership with Nasdaq will unlock price transparency and liquidity, both of which are essential elements to scale the voluntary carbon market.
What does the future hold for CIX and the carbon credit space?
We believe the voluntary carbon market will grow significantly in the years to come. We are on the cusp of a new asset class that is one part of the solution to tackling the climate crisis, especially in hard-to-abate sectors such as cement and steel, where current technology or alternative feedstocks are not yet available at scale. Like other asset classes, these new products will need to be engineered to address the fast-evolving needs of the voluntary carbon market.
On the most basic level, we believe that development opportunities exist for the forwards and futures markets, as well as new investment vehicles and structures. We can also expect to see the rise of themed products in the form of carbon removal and avoidance credits.