Singapore will launch a global exchange for carbon credits by the end of the year.

It is called Climate Impact X (CIX) which is a joint venture of DBS Bank, Standard Chartered Bank, Singapore Exchange and state investor Temasek Holdings.

CIX aims to provide “high-quality carbon credits to address hard-to-abate emissions” to multinational corporations (MNCs) and institutional investors, said a joint statement.

There will also be a project marketplace that caters to a broader spectrum of organisations seeking to participate in the voluntary carbon market, offering them a selection of NCS projects that can help meet their sustainability objectives.

A carbon credit is a permit that allows the company that holds it to emit a certain amount of carbon dioxide or other greenhouse gases. It is generated by projects that help reduce, remove or avoid greenhouse emissions. The credits are validated by a set of independent standards created by NGOs and carbon market participants.

CIX will use satellite monitoring, machine learning, and blockchain technology to improve the transparency, integrity, and quality of carbon credits.

It will initially focus on catalysing the market for natural climate solutions which involve the protection and restoration of natural ecosystems such as forests and wetlands.

CIX will be guided by an International Advisory Council which is an independent expert body comprising non-governmental organisations, companies and project developers, and academics and thought leaders. It will also work with an ecosystem of global partners and international working groups.

Mark Tan of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, the law firm behind Out-Law, said: “The upcoming launch of CIX as a marketplace for high-quality carbon credits by the four key Singapore entities appears to be trying to solve some of the issues currently faced by market participants in the carbon market. Such issues include lack of liquidity and questions over the quality of the carbon credits on offer. This ties in with Singapore’s ongoing drive to transition towards a low carbon economy, and also appears to be an attempt to capitalize on Singapore’s strong reputation as a financial center, as well as its proximity to several Southeast Asian jurisdictions where a number of such projects are located.”