ICE Launches Global Carbon Futures Index Contract

Intercontinental Exchange, a leading global provider of data, technology, and market infrastructure, announced that it plans to launch a futures contract based on the ICE Global Carbon Futures Index (ICE: CO2). The new futures contract is designed to offer the market a way to access and hedge a global price for carbon and is expected to launch in early 2022, subject to regulatory approval.

Additionally, following an index consultation and resulting methodology update, ICE UK Allowance futures (UKA futures) are expected to be added to the ICE Global Carbon Futures Index in January 2022, making it more reflective of global carbon markets. Following this, the index and the new futures contract will allow market participants to access a basket of four of the world’s largest and most liquid carbon futures markets: the ICE European Union Allowances (EUA); the ICE California Carbon Allowances (CCA); the ICE UK Allowances (UKA); and the ICE Regional Greenhouse Gas Initiative CO2 Allowances (RGGI).

“As businesses continue to adapt to the challenges and opportunities presented by net zero, we are likely to see increasing adoption of tools to value positive and negative externalities,” said Gordon Bennett, Managing Director of Utility Markets at ICE. “Carbon cap and trade programmes work to control the quantity of emissions and are one of the most effective means to price the negative externality of pollution by incentivizing the reduction of emissions. Our Global Carbon Futures Index contract allows market participants to gain exposure to the cost of emissions across the four largest cap and trade futures markets in the world, in one tradable instrument.”

The ICE Global Carbon Futures Index, which launched in April 2020, serves as a benchmark for the performance of carbon allowance prices. The index is calculated and published in real-time to the ICE Consolidated Feed. It is part of a suite of ESG-related services ICE offers to customers, which includes the ICE BofA Green Bond Index, ICE Global Government Carbon Reduction Indices, and ICE Climate Risk, which helps investors identify the climate risk in municipal securities across the United States.

ICE offers customers access to the largest and most liquid environmental markets in the world to price climate risk. More than 14 gigatons of carbon trades on ICE annually, equivalent to approximately 40% of the world’s total annual emissions footprint based on current estimates.

Source: ICE

Related articles

  1. This year Webull began providing connectivity to Cboe’s U.S. equities markets.

  2. The exchange also had record equity futures and options volumes.

  3. The association supports the CFTC’s effort to establish new clearing mandates.

  4. 2021 marked the fourth consecutive year of record-setting trading activity.

  5. Outlook 2016: Alexander Lehmann, LSEG

    LCH SwapAgent registered over 10,000 trades in 2021, a five fold increase.