Climate Impact X announces success in pilot to simplify carbon credit buying process
Project with multi-bank initiative Carbonplace aims to streamline onboarding, settlement
Wong Pei Ting
CUSTOMERS of some of the world’s largest banks may soon be able to buy carbon credits from Singapore’s Climate Impact X (CIX) without the hassle of drawn-out onboarding and settlement processes.
On Tuesday (Dec 20), CIX announced that a pilot with Carbonplace, a global carbon credit transaction network, successfully increased the speed, security and accessibility of carbon market trading.
Carbonplace is being developed by nine financial institutions: BNP Paribas, CIBC, Itau Unibanco, National Australia Bank, NatWest Group, BBVA, SMBC, Standard Chartered (StanChart) and UBS. CIX is a carbon marketplace jointly established by DBS, Singapore Exchange, StanChart and Temasek.
CIX chief executive Mikkel Larsen told The Business Times that CIX and Carbonplace will now use outcomes from the pilot to explore how they can “most effectively” integrate their platforms and bring this new capability to the market.
Currently, participants on carbon markets face high barriers to entry, Larsen said. The time it takes to onboard new vendors and open new registry accounts typically spans several months and creates overheads, given some rather technical due diligence processes to mitigate the risk of money laundering, among others, he explained.
The pilot, which comprises a series of test transactions, proved that it is possible to simplify this process and reduce the settlement time by drawing on the in-built compliance processes of Carbonplace and Project Marketplace, CIX’s digital trading venue, he said.
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“To put it simply, we trust the banks to complete the necessary onboarding and settlement processes, and the banks trust CIX to curate quality carbon credit projects for their customers,” Larsen said.
The partnership between CIX and Carbonplace was first announced in March. Since then, Larsen said the parties have taken time to understand each other’s processes and criteria for integrity, as well as to build trust in the collaboration.
These were with a view to support carbon market liquidity and buyer demand, which is expected to exponentially increase in the coming years, he pointed out.
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Carbon Growth Partners and Sustainable Carbon are the project suppliers involved in the test transactions, with Pavilion Energy, NatWest and Itau Unibanco on the buyer side.
Rich Gilmore, chief executive of Carbon Growth Partners, said he is looking forward to tapping a wide pool of buyers, through the “seamless connectivity” between customers of the nine founding banks and Project Marketplace.
NatWest head of carbon markets Bill Gilbert described a “drastic improvement” in funds settlement and counterparty risk assessment in a blockchain environment, and said that it would be pivotal in taking the carbon market to the next level.
Ong Seng Leong, Pavilion Energy’s head of energy financial solutions and environmental solutions, said the integration “opens doors” to a wider and curated range of counterparties, giving his firm “more options to contribute meaningfully in the voluntary carbon market”.
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