Temasek-backed Climate Impact X to merge with UK-based carbon trading platform

[SINGAPORE] Temasek-backed carbon exchange Climate Impact X (CIX) is set to merge with Carbonplace, a carbon portfolio management and trading platform based in the UK, if the deal is approved by the Monetary Authority of Singapore.

Approval is required because some of the shareholders involved are financial institutions regulated in the city-state.

Announcing their intent to merge on Wednesday (Aug 26), both companies said that the deal would bring together complementary capabilities to build the financial market infrastructure underpinning the next phase of environmental markets.

The deal is expected to be completed in the fourth quarter of 2026.

Because of the complementary nature of both companies, the current CEO of CIX, Choo Oi-Yee, who will helm the new combined entity, told The Business Times that she does not expect a reduction in manpower in either companies.

“There’s a huge opportunity set to connect the Europe-Asia piece that we’ve not had the opportunity to double-click on. Having the Carbonplace team join is actually very complementary to what we would like to see,” said Choo.

“I think the second thing is we have different product sets... And what we want to do is bring that together in a more powerful manner... It really is about how we then use our capabilities to grow the market,” she added.

Both companies first worked together on a pilot transaction testing the full life cycle of a carbon credit trade in 2022; credits were bought and sold on CIX, and then processed and settled on the Carbonplace platform.

The feedback from clients for a one-stop shop, where they can trade and complete the sale of carbon credits through one platform, was one of the reasons for the merger, said Carbonplace’s current CEO Scott Eaton, who will serve as president after the merger.

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“In order to truly transact seamlessly, you really want to be able to say, ‘Okay, I’m going to hold my assets in my Carbonplace wallet. I want to move to a marketplace or an exchange where I can see prices and interact with other clients. But wait, do I have to move to that platform?’

“So it’s really about responding to client needs and a rationalisation in my mind of the various steps,” he added.

Beyond the needs of project developers and corporate buyers, Choo said that the merger was also in response to carbon markets becoming larger and more global, therefore requiring infrastructure similar to financial markets to mobilise capital at scale.

The growing use of Article 6 of the Paris Agreement, which governs the cross-border transfer of carbon credits, and the Carbon Offsetting and Reduction Scheme for International Aviation, which requires airlines to offset emissions using eligible credits, are compliance mechanisms that are expected to scale and globalise carbon markets.

Other developments include the setting up of a government-led coalition among Singapore, UK and Kenya, which is aimed at growing carbon markets.

“If you see what’s happening with the Coalition to Grow Carbon Markets, and where governments are wanting to mobilise capital at scale, it means they cannot just sit with the endpoints anymore. It means that there’s actually a layer of financing – bank financing, equity financing – that needs to happen to help grow carbon markets,” noted Choo.

“In that scenario, it is not so simple just to have these different pockets of intermediaries... Carbon is so global today. We’re talking about European countries wanting to fund Rwanda projects... If we both don’t create that layer, how is this going to help scale? So I think that’s probably one of the most powerful propositions of the merger.”

She also said that the merger would allow CIX to connect its network of credit suppliers and developers in South-east Asia and other emerging markets with potential corporate buyers that Carbonplace is already working with.

The combined shareholder group post-merger comprises BBVA, BNP Paribas, CIBC, DBS, GenZero, Mizuho, National Australia Bank, NatWest, the Singapore Exchange, Standard Chartered, Sumitomo Mitsui Banking Corporation (SMBC) and UBS.

Asked about the equity breakdown among the shareholders, Choo said that the figures were not yet available for disclosure. The name of the new entity was also not revealed.

CIX is jointly owned by DBS, Singapore Exchange, StanChart, Mizuho and GenZero, a decarbonisation-focused investment platform founded by Temasek.

Besides StanChart, which is also a shareholder in Carbonplace, the other eight shareholders are BBVA, BNP Paribas, CIBC, Itau Unibanco, National Australia Bank, NatWest, SMBC and UBS.