now loading...
Wealth Asia Connect Middle East Treasury & Capital Markets Europe ESG Forum TechTalk
Green Finance / ESG Investing / Treasury & Capital Markets
CIX launches new nature-based carbon removal contracts
Spot contract series enables market players to trade and price the most liquid and relevant segments of ARR market
The Asset 5 Apr 2024

Climate Impact X (CIX), a Singapore-based global marketplace for carbon credits, has launched a new series of standardized contracts for nature-based carbon removal credits.

Validated through industry consultation, the latest physical spot contracts will enable market participants to trade and price the most liquid and relevant segments of the afforestation, reforestation and revegetation (ARR) market today.

The first carbon removals contract series to launch on CIX Exchange will initially comprise two tradeable contracts based on geographical coverage: CIX ARR X (CAX), which is a basket of 12 global ARR projects, and CIX ARR X – China (CAX-C), consisting of China projects issued by Verra.

By close of trading on April 4, 10,000 tonnes of carbon credits had traded and cleared on CIX ARR X contracts. On screen, a total of 21,000 tonnes were bid and offered with a spread of around 40 US cents. Assessed prices for the CAX and CAX-C benchmarks were US$13.10 and US$4.36 per tonne, respectively.

According to the Intergovernmental Panel on Climate Change (IPCC), all pathways to limit global warming to 1.5°C involves the use of carbon removals. Around half of these efforts can be supported by natural climate solutions, with ARR projects making up the majority.

While retirements of ARR credits with considerable co-benefits reached an all-time high in January 2024, the variance and opacity in pricing alongside liquidity fragmentation continue to be major barriers to broader market participation.

More efficient, transparent ARR market

 CIX ARR X contracts are designed to be precise enough to give buyers confidence and certainty in the projects delivered, while remaining broad enough for ample liquidity and to give sellers optionality.

“Contract standardization plays a key role in enhancing the functionality of carbon markets by addressing challenges such as illiquidity, delivery certainty and pricing opacity,” says CIX head of exchange Ellery Sutanto.

“Our decision to launch CIX ARR X is backed by global demand for nature-based removal projects, with Europe and Asia-Pacific being the biggest retirees of ARR credits. By concentrating trading activity, we are building a deeper, more efficient and transparent ARR market – all of which are critical ingredients for scaling investment, confidence and new participants in carbon markets.”

To generate shaper and more transparent market prices, CIX will leverage its signature on-exchange spot pricing session to concentrate ARR trading activity within a weekly 30-minute window every Thursday.

Taking place at the intersection of Asian and European time zones, this not only helps to pool liquidity from some of the most active ARR markets to generate more order depth, but also build market-driven price benchmarks, CIX says.

Conversation
Jang Ping Thia
Jang Ping Thia
lead economist and economics department manager
Asian Infrastructure Investment Bank
- JOINED THE EVENT -
7th Asia Sustainable Infrastructure Finance Leaders Dialogue
Infrastructure of the future
View Highlights
Conversation
Serena Tan
Serena Tan
senior analyst, responsible investments
Nordea Asset Management
- JOINED THE EVENT -
In-person roundtable
Tech in ESG
View Highlights