This July, CIX hosted our very first pricing-focused webinar: Resolving the carbon pricing problem in the voluntary carbon market (VCM).
The webinar explored how market participants could do their part in shaping the VCM of tomorrow and the importance of price transparency to facilitate market confidence. We were honored to be joined by our line-up of speakers comprising David Stead from Hartree Partners/Vertree, Nicole Sharp from Standard Chartered Bank, and Rich Gilmore from Carbon Growth Partners. Below are our three key takeaways from the webinar.
The time for companies to participate in carbon markets to contribute to global climate action is now.
According to IPCC, greenhouse gas emissions are on the rise with the potential to exceed the 2 degree increase within the 21st century unless deep reductions of carbon emissions are implemented. Furthermore, developing nations will need approximately USD $5.8 trillion to finance less than half of their climate actions goals. There is need for climate finance to be channeled to communities who are often the most impacted yet least responsible for climate change and voluntary carbon markets (VCM) play a key role in that transformation.
“Every company already has all the information it needs to participate in this market at scale, and they’re making an active choice not to do so. I would say that is unconscionable.” – Rich Gilmore
Companies need to acknowledge the urgency for effective and directed climate financing toward communities that need it, and the importance of VCMs in closing that gap.
Price discovery underpins directed climate financing to empower the local forest-preserving communities.
“The communities on the other side who are preserving forests or making climate interventions in their own lives are not necessarily always empowered to value those services fairly and accurately.” – David Stead
While the call to climate action is urgent, these actions must also be equitable and credible for the communities that need it. CIX has identified the need for price discovery, and our Exchange has launched a dedicated 30-minute daily pricing session to address this gap. This pricing session concentrates all-day liquidity pooled from the underserved and overlapping Asia, Europe and Middle East trading hubs, forming the first daily liquidity window in the VCM. This enables the generation of sharper market prices for more informed decision making to improve resource allocation for the communities in need.
Credible benchmarks are the key to transparent and market-representative pricing.
Credible benchmarks form a pricing intelligence that effectively improves price discovery. At CIX, our suite of price assessments aims to track the credit value of REDD+ projects, which channel finance towards the conservation and sustainable management of forests. This forms the CIX Nature X benchmark on our Exchange, which prioritizes firm open-market transactions and order to help establish a robust and transparent market-driven price market. Furthermore, to commit to a resilient and well-functioning benchmarking process, we also seek alignment with IOSCO principles.
“There is no reason why the CNX basket of 11 projects can’t enable all REDD+ projects globally to be priced off it. You will then have that base price, that key level that is robust and easily observable that we can trade around.” – Nicole Sharp
The narrower project eligibility of Nature X ensures a tighter benchmark to reflect globally recognized and accepted REDD+ projects. Furthermore, we focus on natural climate solutions such as REDD+ to support their vital role in meeting climate goals. Together, the core suite of solutions offered by CIX seek to build a transparent, credible, and scalable VCM to enact real climate impact.
Tackling price transparency and credibility within the VCM is necessary to ensure that sufficient and directed climate finance is available to protect our planet.
At Climate Impact X, we offer a suite of price assessments tracking the value of nature-based credits. These assessments will cover standardised contracts tradeable on CIX Exchange, as well as a range of price differentials for various credit vintages. If you would like to receive our pricing intelligence, CIX Carbon Daily, register now: https://lnkd.in/g7m3c6zX
