Global exchange and clearing house operator Intercontinental Exchange (ICE) announced today plans to launch its first Nature-Based Solutions (NBS) carbon credit futures contract, anticipated for Q1 2022.
Demand for carbon offset projects that counteract the release of greenhouse gases, and related credits, is expected to increase significantly over the next several years, as companies and businesses increasingly launch net zero ambitions, and turn to offsets as a bridge to their own absolute emissions reduction efforts, or to balance difficult to avoid emissions. Nature-based carbon solutions refer to projects such as redeveloping forests or wetlands, which protect or transform land, improve biodiversity, and enable nature to absorb CO2 from the environment.
Each futures contract will be equal to 1,000 eligible credits, with each credit equivalent to one metric ton of greenhouse gas emissions.
According to Gordon Bennett, Managing Director of Utility Markets at ICE, the new futures contract “will allow the market to value natural assets in the agriculture, forestry and other land use sectors.” Bennett added:
“At ICE, our futures market and auction platform are integral in facilitating the flow of capital to projects that can help the world meet its commitments to the Paris Agreement, as well as help preserve natural assets.”
ICE also announced that its ICE Benchmark Administration (IBA) will form a new oversight committee, aimed at providing independent governance and oversight of ICE’s activities in the voluntary carbon markets, and advising on the criteria that must be met by carbon credits to be deliverable in ICE hosted futures contracts.
Tim Bowler, President of ICE Benchmark Administration, said:
“Robust governance and oversight of ICE’s platforms in the voluntary carbon markets will help give buyers confidence that credits purchased through the futures contract have environmental integrity. By providing enhanced governance and oversight, the ICE Carbon Oversight Committee will help the environmental markets grow and increase confidence in the quality of the credits being bought through ICE’s marketplaces.”