IntercontinentalExchange (NYSE:ICE) (ICE), a leading provider of data, technology and market infrastructure, has announced its plans to open the first environmental futures market based on Alberta’s carbon program.
The market, to be opened by the company’s physical energy exchange and clearinghouse, ICE NGX in Calgary, Canada, will introduce physically delivered AB Emissions Offsets Futures (AEO) and AB Emissions Performance Credit Futures (AEPC).
These contracts will allow companies to buy, sell and hedge carbon credits under Alberta’s Technology Innovation and Emissions Reduction (TIER) program, ICE said in a statement.
The Alberta TIER program is a regulatory framework to manage greenhouse gas emissions. Under the program, companies that meet certain criteria, such as emitting 100,000 tonnes or more of carbon dioxide equivalent per year or importing more than 10,000 tonnes of hydrogen per year, are required to meet annual emissions reduction targets.
The Compliance Market established by the TIER program allows Covered Companies to participate in a system where they can meet their obligations in a variety of ways, including purchasing carbon offsets or performance credits. These credits represent the reduction in greenhouse gas emissions achieved by eligible projects.
By providing pricing transparency and attracting new participants, ICE hopes to improve liquidity and capital efficiency for customers while meeting Alberta’s environmental program requirements.
Greg Abbott, President of IGX NGX, highlighted the benefits of Alberta’s carbon futures market.
“A physical carbon futures market in Alberta provides price transparency and attracts new participants while allowing customers access to greater liquidity and capital efficiency,” Abbott said.
“Alberta’s TIER entry into ICE means that these contracts will trade alongside ICE’s global environmental and energy benchmarks in carbon, oil, natural gas and power, and settle alongside Alberta natural gas and power.”
ICE NGX has operated Alberta’s natural gas and power futures markets for nearly three decades and has made the AB-NIT hub one of the most liquid energy markets in North America.
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