UBS, Standard Chartered and BNP Paribas join NAB and others to develop carbon market platform

UBS, Standard Chartered and BNP Paribas join NAB and others to develop a carbon market settlement platform, slated to be operational by the end of the year.

There are now seven banks including National Australia Bank backing the new Carbonplace platform.

UBS, Standard Chartered and BNP Paribas have joined a group including National Australia Bank to develop a carbon market settlement platform, which expects to be operational by the year’s end.

In a statement on Tuesday, the parties said the initiative would now be called Carbonplace, with the platform aiming to provide technology infrastructure to facilitate “reliable, secure and scalable trading of high-integrity carbon credits”

NAB, alongside Canada’s CIBC, Brazil’s Itaú Unibanco and the UK’s NatWest launched Project Carbon last year. It started with a voluntary carbon marketplace pilot which kicked off in August and ran for 12 weeks.

Alongside the name change, the group said UBS, Standard Chartered and BNP would join the four founding members on the project.

The high-profile grouping of banks comes amid intense debate about the value and validity of carbon credits as many markets move to achieve net zero emissions targets by 2050.

The Taskforce on Scaling Voluntary Carbon Markets – sponsored by the Institute of International Finance with support from consultants McKinsey – estimates that demand for carbon credits may swell by a factor of 15 or more by 2030 and by a factor of up to 100 by 2050.

A McKinsey report released last year said the market for carbon credits could be worth upward of $US50bn ($70.15bn) in 2030. However, the report also called for the integrity of voluntary carbon markets to be improved across participant eligibility, participant oversight, and market functioning.

The Carbonplace project said only carbon credits “verified according to internationally-agreed standards” would be processed on its platform.

UBS global markets co-head of distribution Kevin Arnold said: “Making connections is at the heart of what we do for our clients, which is why we’re delighted to become a member of Carbonplace. This innovative platform will help create a streamlined and transparent voluntary carbon market for our clients and the industry, which will be critical to helping us all fulfil our sustainability strategies.”

Separately, Commonwealth Bank has also taken an active position on carbon trading and its potential future growth prospects. In September, the bank emerged as the newest big name investor in the latest $US100m capital raising for commodities marketplace Xpansiv,

CBA made a $15m investment in Xpansiv as part of a strategic agreement, while the raising was also backed by Wilson Asset Management and the federal government’s Clean Energy Finance Corporation.

The federal government is taking steps to set up the Australian Carbon Exchange. Final decisions on who the government will move forward with as operators are expected in the second quarter 2022, with a likely launch in 2023.

The carbon exchange will operate in a similar way to an online stock exchange.

Standard Chartered’s head of carbon markets development Chris Leeds said “Carbonplace will reduce barriers to entry in the voluntary carbon market, and give project developers in the global south direct access to large numbers of customers looking to fund carbon reduction and removal projects.”

“It builds on the work Standard Chartered has been involved in, in the Taskforce for Scaling the Voluntary Carbon Markets, and ensures that carbon credits on this platform are of the highest-quality.”

BNP’s global markets sustainability chief Constance Chalchat said Carbonplace will give “greater transparency on the pricing and material climate impact of carbon credits, and supports corporates and investors to access quality projects as part of their multi-action carbon management strategies.”