Temasek-backed CIX to feature carbon ratings on trading platform
This will give users access to project-level assessments, enabling them to make more informed decisions on their trades
USERS of Climate Impact X’s (CIX) carbon trading platform will be able to assess the quality of a project’s carbon credits, as part of a new partnership between the Temasek-backed carbon exchange and BeZero Carbon, a carbon ratings agency.
CIX Exchange’s main trading screen will now feature headline ratings by BeZero Carbon, allowing users to have access to project-level assessments and enabling them to make more informed decisions on their trades.
Each project will be rated on an eight-point scale from “AAA” to “D”, with an “AAA” rating representing the highest likelihood that a carbon credit generated from the project will deliver on its claim of avoiding or removing a tonne of carbon dioxide equivalent from the atmosphere. Similarly, a project with a “D” rating would mean that each carbon credit it generates has the “lowest likelihood” of delivering on the same claim.
In a media release on Monday (Nov 4), CIX called this a critical step in building high-integrity carbon markets, saying that it “will enable users including financial institutions, intermediaries and corporate buyers to make better-informed trading and investment decisions on climate action projects”.
It added that this will also equip users with the tools to better understand the relationship between price and quality in the context of carbon credit liquidity.
Users of CIX’s carbon trading platform are able to trade benchmark spot contracts in real time, alongside single projects. This allows them to transparently discover price differences between the benchmark spot contracts and individual projects.
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With the platform featuring more information on these credits through its ratings, users will have an additional reference point on project integrity risks, said CIX, thereby supporting more informed trading decisions.
“Evidence-based ratings help investors understand the impact of their investments, and direct capital to quality climate projects. By increasing confidence in carbon credits as reliable instruments for climate action, (the) ratings are building a crucial bridge between the price of credits and their effectiveness as each BeZero Carbon rating notch adds an average premium of around 30 per cent to the price of a credit,” it added.
Ellery Sutanto, CIX’s head of exchange, said that the partnership with BeZero Carbon enhances the platform’s capabilities, as market participants are equipped with even more data to align their trading and investment strategies with their risk appetite.
”This partnership not only reinforces CIX’s commitment to fostering a more transparent and efficient carbon market, but also demonstrates our dedication to providing our customers with seamless access to the insights they need to make informed decisions.”
Tommy Ricketts, chief executive officer and co-founder of BeZero Carbon, noted that this partnership is an avenue for the carbon ratings agency to participate in the growth of South-east Asia’s carbon markets.
“It’s through partnerships such as these that ratings have quickly become critical infrastructure for the expansion of carbon markets on a global scale, enabling the effective allocation of capital towards high-quality projects that protect our planet and future.”
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