Blog: ICE offering nature-based carbon credit futures – Financial Regulation News – Financial Regulation News

Intercontinental Exchange has launched a Nature-Based Solutions (NBS) carbon credit futures contract.

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The NBS future, which trades under the contract code NBT, 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 Jan. 1, 2016, to Dec. 31, 2020.

Each NBS futures contract is equal to 1,000 carbon credits. Further, each credit is equivalent to removing or reducing one metric ton of greenhouse gas emissions achieved by projects that preserve and maintain natural ecosystems.

Chevron Products Company, EDF Trading, Elbow River Marketing, the Macquarie Group, Shell, Trafigura, Vertree Partners, and Vitol are among the participants supporting the contract.

“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,” Gordon Bennett, managing director of Utility Markets at ICE, said. “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 as over 100 billion tons of carbon allowances, 250 million renewable energy certificates, three billion carbon credits, and the equivalent of over 1.4 billion Renewable Identification Numbers have traded on ICE. Last year, ICE traded the equivalent of an estimated $1 trillion in notional value of carbon allowances.

“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,” Hannah Hauman, global head of carbon trading for Trafigura, said. “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.”

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