ICE Announces Record Growth in North American Environmental Products as the Market Prices Climate Risk

Rhea-AI Summary

Intercontinental Exchange (NYSE: ICE) reports record growth in its North American environmental complex, driven by increased participation in carbon markets. Average Daily Volume (ADV) has risen by 20% annually since 2017, with open interest surpassing 1.1 million contracts as of June 25. Daily trading includes 6.9 million tons of carbon dioxide in the CCA market. Additionally, ICE's REC futures contracts traded 463,228 as of June 29, equating to enough renewable energy to power approximately 2.7 million homes for a year. The company continues to lead in carbon cap and trade markets globally.

Positive

• 20% average annual growth in Average Daily Volume since 2017.
• Open interest in environmental contracts exceeded 1.1 million on June 25.
• 6.9 million tons of carbon dioxide traded daily in CCA market.
• 463,228 REC futures traded in 2021, equivalent to powering 2.7 million homes.

Negative

• None.

Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, today announced record growth in ICE’s North American environmental complex as increasing numbers of participants use these markets to price and manage climate risk.

The North American environmental complex is made up of futures and options on California Carbon Allowances (CCAs), California Carbon Offsets (CCOs), Regional Greenhouse Gas Initiative Allowances (RGGI), Low Carbon Fuel Standard (LCFS) Credits, and Renewable Energy Certificates (RECs). Average Daily Volume (ADV) has grown 20% on average every year since 2017, while open interest hit a record high of more than 1.1 million contracts on June 25.

Today, 6.9 million tons of carbon dioxide trades each day through ICE’s CCA market, with open interest in CCA futures and options at 445,451 contracts as of June 28. In RGGI futures, 121,319 contracts have traded year-to-date, with ADV up 69% versus last year.

ICE has been active in carbon offset markets since 2008, with more than 3 billion tons of Certified Emission Reductions (CERs) traded on ICE. In April 2019, ICE launched California Carbon Offset (CCO) futures. Approximately 1.9 million tons of CCOs have traded on ICE to date, with a record 760,000 CCOs traded in the month of June 2021 alone.

“ICE offers investors access to the most liquid environmental markets available, providing transparent price signals which allow customers to price and manage climate risk globally and accurately value the energy we generate and consume,” said Gordon Bennett, Managing Director, Utility Markets at ICE. “Carbon pricing plays a key role in helping erode so-called “green premiums”, meaning the difference in cost between a product that involves emitting carbon and an alternative that doesn’t. The growing number and range of participants actively trading our environmental markets reflects the powerful momentum, created through a combination of policy and economics, which is driving and supporting environmental programs globally.”

U.S. Renewable Energy Certificate (REC) markets are among the most liquid and transparent green certificate markets available. ICE’s REC futures contracts are for renewable energy certificates issued by a specific state’s renewable portfolio standard (RPS). ICE offers investors REC futures from five different state RPS programs. A total of 463,228 REC futures have traded in 2021 as of June 29, equivalent to almost 30 million megawatt hours of renewable energy or enough to power around 2.7 million homes for a year. Open interest in ICE’s REC futures stands at 577,904 contracts.

ICE hosts the four largest and most liquid carbon cap and trade markets in the world. ICE’s European Emission allowance market is the largest in terms of volume, followed by ICE’s California Carbon allowances. With the successful introduction of the UK carbon market in May 2021, ICE UK allowances now contend with Regional Greenhouse Gas Initiative (RGGI) allowances as the third largest carbon market.

More than 14 gigatons of carbon trades on ICE annually, equivalent to approximately 40% of the world’s total annual energy-related emissions footprint based on current estimates. From 2017 to 2020, the number of participants trading ICE’s carbon markets increased by more than 40%. Participants based in North America were the strongest contributor to this growth, increasing by more than 70%. Meanwhile, the number of participants trading both European and North American carbon markets at ICE grew by approximately 85%.

ICE has been a leader in environmental markets for over two decades. Stakeholders use the price signals from ICE’s global markets and indices to help assess climate transition risk in their portfolios, and access liquidity pools for compliance purposes, to manage risk and allocate capital to benefit from energy transition opportunities. For more information on how to trade and clear these markets visit https://www.theice.com/energy/environmental, read our FAQs or contact sales-utilities@ice.com.

About Intercontinental Exchange

Intercontinental Exchange, Inc. (NYSE: ICE) is a Fortune 500 company that designs, builds and operates digital networks to connect people to opportunity. We provide financial technology and data services across major asset classes that offer our customers access to mission-critical workflow tools that increase transparency and operational efficiencies. We operate exchanges, including the New York Stock Exchange, and clearing houses that help people invest, raise capital and manage risk across multiple asset classes. Our comprehensive fixed income data services and execution capabilities provide information, analytics and platforms that help our customers capitalize on opportunities and operate more efficiently. At ICE Mortgage Technology, we are transforming and digitizing the U.S. residential mortgage process, from consumer engagement through loan registration. Together, we transform, streamline and automate industries to connect our customers to opportunity.

Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located here. Key Information Documents for certain products covered by the EU Packaged Retail and Insurance-based Investment Products Regulation can be accessed on the relevant exchange website under the heading “Key Information Documents (KIDS).”

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 -- Statements in this press release regarding ICE's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE's Securities and Exchange Commission (SEC) filings, including, but not limited to, the risk factors in ICE's Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on February 4, 2021.

ICE- CORP
Source: Intercontinental Exchange

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FAQ

What is the recent growth in ICE's environmental markets?

ICE has seen a 20% average annual growth in Average Daily Volume since 2017 in its North American environmental complex.

What is the current open interest in ICE's carbon allowance market?

As of June 25, open interest in ICE's carbon allowance market exceeded 1.1 million contracts.

How many tons of carbon dioxide are traded daily through ICE's market?

ICE's California Carbon Allowance market trades 6.9 million tons of carbon dioxide daily.

What is the significance of REC futures traded by ICE?

As of June 29, 2021, ICE traded 463,228 REC futures, equivalent to nearly 30 million megawatt hours of renewable energy.