05.10.2022

ICE Launches Nature-Based Solutions Carbon Credit Futures

05.10.2022

Intercontinental Exchange, a leading global provider of data, technology, and market infrastructure, 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.

Source: ICE

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