Singapore’s CIX Launches Nature-Based Carbon Removal Contracts

Climate Impact X (CIX), the Singapore headquartered global marketplace, auctions house and exchange for carbon credits, has launched a new series of standardised 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. 

Branded CIX ARR X, this is the first carbon removals contract series to launch on CIX Exchange. Available at launch are two tradeable contracts comprising market-accepted ARR credits, grouped based on geographical coverage: CIX ARR X (“CAX”) and CIX ARR X – China (“CAX-C”). 

Contract Project Location   Registry Project Inclusion   
[CAX] Global Gold Standard, Verra Selected projects – CAX represents a curated delivery basket of 12 global well-accepted ARR projects with generally attractive attributes 
[CAX-C] China Verra  All eligible verified ARR projects in China 

By close of trading on 4 April 2024, 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 US$0.40. Assessed prices for the CAX and CAX-C benchmarks were US$13.10 and US$4.36 per tonne, respectively. 

According to the 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. 

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. 

Ellery Sutanto, Head of Exchange at CIX, said: “Contract standardisation plays a key role in enhancing the functionality of carbon markets by addressing challenges such as illiquidity, delivery certainty and pricing opacity. 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. 

Julien Hall, Pricing Director at CIX added: “Given the complexity and differences in the underlying traits of ARR projects, pricing for ARR credits is inherently stratified. As with our existing REDD+ and cookstoves prices, CIX ARR X benchmarks are intended as robust and consistent bellwethers to track price movements across the ARR market, providing a ‘base price’ on which premiums and discounts can be applied – for example, to account for project characteristics or for vintage or volume differences. In the long-term, our hope is that they will help bring about enhanced price transparency and new risk management tools such as market-linked pricing mechanisms.”

In addition to standardised contracts, individually listed ARR projects will also be available for trade on CIX Exchange, helping shed new light on project-level price differentials. This includes all projects eligible for delivery into CIX ARR X contracts.