Intercontinental Exchange, a leading global provider of data, technology, and market infrastructure, announced plans to launch the first environmental futures market based on Alberta’s carbon program.

ICE plans to launch physically delivered AB Emissions Offsets Futures (AEO) and AB Emissions Performance Credit Futures (AEPC) at ICE NGX, ICE’s physical energy exchange and clearing house based in Calgary, Canada. A range of past and future vintages eligible for compliance within Alberta’s Technology Innovation and Emissions Reduction (TIER) program will be available. The contracts are anticipated to launch in the third quarter of 2023, subject to regulatory approval.

Alberta’s TIER program seeks to manage Alberta’s greenhouse gas emissions through a compliance market where entities covered under the system, including those which emit 100,000 tons or more of carbon dioxide equivalent per year or import more than 10,000 tons of hydrogen annually, have annual compliance obligations. ICE’s new futures contracts will let entities buy, sell, and hedge their exposure to the credits and the escalating Alberta TIER fund price required by the program.

“We have worked to ensure the design of this market meets the requirements of Alberta’s environmental program and is tailored to the needs of our clients who currently participate in this market,” said Greg Abbott, President at ICE NGX. “An Alberta carbon physical futures market brings price transparency and attracts new participants, while allowing clients to access greater liquidity and capital efficiency. Alberta TIER coming to ICE means these contracts will be traded alongside ICE’s global environmental and energy benchmarks across carbon, oil, natural gas, and power, and cleared alongside Alberta natural gas and electricity.”

The contracts will be cleared at ICE NGX, bringing physical delivery and payment assurance, as well as stronger measures to protect participants against the potential invalidation of credits under the program following delivery.

ICE NGX has operated the Alberta natural gas and electricity futures markets for nearly three decades, developing the AB-NIT (“AECO”) hub into one of the most liquid spot and forward energy markets in North America.

ICE is a leader in global energy and environmental markets. Since launch, over 100 billion carbon allowances, 350 million renewable energy certificates, approximately 6 billion carbon credits, and the equivalent of 5 billion Renewable Identification Numbers have traded on ICE. Environmentals are part of ICE’s extensive global commodity markets where open interest is up 12% year-over-year at 52.6 million contracts.

Source: ICE