ICE Launches UK Emissions Futures
Intercontinental Exchange, a leading global provider of data, technology, and market infrastructure, announced that it has launched ICE UK Allowance (“UKA”) Futures contracts and hosted the first auction of the UK Emissions Trading Scheme (“UK ETS”).
6,052,000 UK allowances were offered for auction and all allowances were sold during the auction. Auctions of UKAs take place every other Wednesday throughout the year, between 12.00 and 14.00 UK time. Auctions have a floor price of £22 per tonne.
Today, we launched UK carbon futures and hosted the first UK carbon auction. All c.6m carbon allowances were sold during the auction at a clearing price of £43.99 with 14 successful bidders.
— ICE (@ICE_Markets) May 19, 2021
ICE UK Allowance (UKA) futures contracts, which launched today, are equivalent to 1000 Allowances. UKA Daily Futures are due to be launched on May 21, 2021.
ICE UKA futures trade on ICE Futures Europe and clear at ICE Clear Europe alongside ICE’s global environmental complex, including European Union Allowances (EUA), California Carbon Allowances (CCAs) and California Carbon Offsets (CCOs).
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%.
“The first UK carbon auction has seen active participation by the market”, said Gordon Bennett, Managing Director, Utility Markets, ICE. “Market based mechanisms like emission trading schemes play a crucial role in helping customers reduce their carbon emissions by attributing a cost to pollution. Now, there is an enormous opportunity for cap and trade programs to take an even greater role in supporting customers’ carbon reduction goals, whether it is increasing their sector coverage or encouraging international linking.”
ICE has been a leader in environmental markets for over two decades and offers customers access to the largest and most liquid environmental markets in the world.
More than 14 gigatonnes of carbon trades on ICE annually, which is equivalent to approximately 40% of the world’s total annual energy-related emissions footprint based on current estimates. A wide and increasing group of 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, managing risk and allocating capital to benefit from energy transition opportunities.
Full details of the UK Allowance (UKA) auctions, including the auction calendar and auction results, can be found here alongside FAQs. Market participants who are interested in bidding in UK ETS auctions should contact email@example.com.
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The contract offers the market a way to access and hedge a global price for carbon.
The exchange launched on March 29 this year.
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