Blog: Intercontinental Exchange launches first carbon-neutral U.S. … – Financial Regulation News

In a first for the United States, tech and data infrastructure provider Intercontinental Exchange, Inc. (ICE) launched the ICE U.S. Carbon Neutral Power Index this week, based on methods licensed from Carbon Neutral Investment Company LLC (CNIC).

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This collection of electricity futures could mark a major change for commodity indices, according to Varun Pawar, vice president and head of ICE Data Indices, through a financial instrument for investors looking for more sustainable exposure in their portfolios. In particular, it could capitalize on North American efforts to build out renewable generation and its impact on U.S. power prices.

“Electricity is the second largest energy component of the Consumer Price Index and is not directly included in any of the existing major commodity indices,” Pawar said.

To date, ICE’s gathering of indices – including the New York Stock Exchange – serves as a performance benchmark for more than $1.5 trillion in assets worldwide. Here, its Carbon Neutral Power Index will incorporate twelve months of ICE-listed electricity futures contracts from six major U.S. power pools, along with carbon allowance futures contracts meant to balance the emissions of the generation affiliated with those futures contracts. In this way, ICE said its index will broadly represent U.S. electricity consumption and price.

“We are proud to have licensed our methodology as part of the ICE U.S. Carbon Neutral Power Index,” Donald Sinclair, chairman of CNIC, said. “This index will assist us in developing financial instruments that provide investors exposure to exchange-traded electricity futures and carbon offsets while having the ability to use the ICE U.S. Carbon Neutral Power Index as a benchmark.”

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