Singapore to host carbon offset exchange

Singapore aims to launch a carbon offset exchange by the end of this year, complementing its role as a commodity trading hub and global financial and legal centre.

Climate Impact X (CIX) aims to be a global exchange and marketplace for high-quality carbon credits to offset emissions. Carbon credits can provide a short-term solution for companies and organisations to bridge the gap of meeting their emissions reduction targets, CIX said at its launch yesterday, before technology such as renewables is developed and adopted on a greater scale to meet these goals.

The venture is backed by Singapore exchange SGX, banks DBS and Standard Chartered and Singapore state-controlled investment firm Temasek. It will initially focus on natural climate solutions, which involve protection and restoration of natural ecosystems such as forests, wetlands and mangroves, offering carbon credits from projects across the world that will be supported by transparent environmental impact, risk and pricing data. It is in discussions with global rating agencies to provide independent ratings for these projects.

The use of carbon offsets through nature-based solutions offers a cost-effective way for oil firms to eliminate emissions from hard-to-abate sectors as they set out their pathways to net-zero emissions. But risks and complexities around the mechanism raise questions around its use in the oil and gas sector.

"There is likely to be a limited supply of emissions credits consistent with net-zero emissions globally, and the use of such credits could divert investment from options that enable direct emissions reductions," according to the International Energy Agency.

By Richard Davies