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ICE Launches its First Nature-Based Solutions Carbon Credit Futures Contract
Rhea-AI Impact
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Rhea-AI Sentiment
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Rhea-AI Summary
Intercontinental Exchange (NYSE: ICE) has launched a new Nature-Based Solutions carbon credit futures contract (code: NBT), facilitating the trade of Verified Carbon Unit (VCU) credits. Each contract represents 1,000 carbon credits linked to projects that reduce greenhouse gas emissions. Notable participants in this contract include Chevron, EDF Trading, and Shell. The initiative aims to enhance transparency and liquidity in the carbon market, which could play a vital role in achieving net-zero emissions. ICE’s environmental markets have traded over 3 billion carbon credits and $1 trillion in carbon allowances in 2021.
Positive
Launch of NBS futures contract could enhance market transparency and liquidity.
Participation of major companies like Chevron and Shell indicates strong market interest.
ICE's historical trading volume in environmental markets reflects established credibility.
Negative
None.
LONDON--(BUSINESS WIRE)--
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, today announced that it has launched a Nature-Based Solutions carbon credit futures contract (“NBS future”).
The NBS future, which trades under the contract code NBT, physically delivers Verified Carbon Unit (VCU) credits certified under Verra’s Verified Carbon Standard (VCS) Agriculture, Forestry and Other Land Use (AFOLU) Projects with Climate, Community and Biodiversity (CCB) Certification, with vintages between January 1, 2016, to December 31, 2020.
Each NBS futures contract is equal to 1,000 carbon credits, where each credit is equal to the removal or reduction of one metric ton of greenhouse gas emissions achieved by projects that preserve and maintain natural ecosystems. ICE has listed NBS futures expiries in December 2022, December 2023, and December 2024.
Participants supporting the contract include Chevron Products Company, a division of Chevron U.S.A. Inc., EDF Trading, Elbow River Marketing Ltd. a fully owned Parkland Fuel subsidiary, the Macquarie Group, Shell, Trafigura, Vertree Partners and Vitol.
“The launch of ICE’s Nature-Based Carbon Futures contract is a significant foundational development in the architecture of global carbon markets, helping to deliver transparency and liquidity for quality nature-based solutions,” said Hannah Hauman, Global Head of Carbon Trading for Trafigura. “The new contract in particular delivers a direct link to Paris-aligned compliance periods, preparing for the next stage of market development as countries operationalize Article 6.”
“Carbon credits have a complementary role to play in the energy transition, but quality assurance is key,” said Michael Curran, Head of Carbon and Environmental Products at Vitol. “We very much welcome the launch of ICE’s NBS futures contract which will facilitate investment in verified carbon mitigating projects and should raise standards and price transparency across the carbon credit-industry.”
“The launch of the ICE Nature-Based Solutions Carbon Credit Future is another important milestone in bringing more transparency and scale to the voluntary carbon market,” said Bill McGrath, Shell’s General Manager for Global Environmental Products. “Carbon credits have an important role in the journey to net zero and innovative market-based mechanisms like this will encourage the flow of capital for the development of nature-based projects.”
“We are excited and supportive of the increasing adoption of the voluntary carbon credit market across the globe. ICE delivers a thoughtful approach to an exchange product that will provide liquidity for this emerging market,” said Elbow River Marketing Ltd., a fully owned Parkland Fuel subsidiary.
“The NBS future is our first contract specifically designed to measure the carbon sequestration and storage capabilities of nature, which we hope will be an important valuation tool to conserve and grow the world’s natural capital base,” said Gordon Bennett, Managing Director of Utility Markets at ICE. “ICE’s environmental markets are instrumental in providing price signals for negative and positive externalities, incentivizing the efficient allocation of capital across the carbon cycle to balance the world’s carbon budget and meet the goals of net zero, providing the mitigation pathway to manage climate risk.”
ICE has operated environmental markets for almost two decades. During this time, over 100 billion tons of carbon allowances, over 250 million renewable energy certificates, three billion carbon credits, and the equivalent of over 1.4 billion Renewable Identification Numbers have traded on ICE, reflecting ICE’s role as the world’s leading environmental marketplace. In 2021, ICE traded the equivalent of an estimated $1 trillion in notional value of carbon allowances, equal to over half the world’s estimated total annual energy-related emissions footprint.
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, 2021, as filed with the SEC on February 3, 2022.
