THE AFRICA BAZAAR STAFF
February 08, 2021
The Intercontinental Exchange said on Monday it plans to move most of its European Union carbon markets from London to Netherlands during the second quarter of this year.
President of ICE Futures Europe Stuart Williams said “the decision to transition the execution of EU emission allowance contracts to the Netherlands follows close dialogue with customers over the past few months and will help those who rely on these markets to meet obligations and manage climate price risk in the most cost-effective and seamless manner.”
Willaims added that the the firm will “carry out this process in the smoothest possible manner for customers.”
The company said in its released statement the ICE EUA and EUAA markets will continue to be cleared at ICE Clear Europe in London alongside ICE’s global environmental complex including California Carbon Allowances and California Carbon Offsets, as well as some of the largest energy contracts in the world across oil, natural gas, power and coal, allowing those who trade to benefit from the margin offsets created by clearing alongside ICE’s global energy complex.
The EU Emissions Trading Scheme is a cornerstone of the EU’s policy to combat climate change. Market-based mechanisms like carbon cap and trade programs are pivotal in allowing policy makers to control the quantity of carbon to align with their net-zero commitments and put a price on emissions to reach those goals in the most cost-effective manner.
EUA futures and options volume traded on ICE has increased more than 100% from 2015 to 2020. More than 12 million lots of EUA futures and options traded on ICE in 2020, equivalent to 12 billion allowances or 12 gigatonnes.
ICE’s EUA contract is one part of ICE’s global environmental complex which includes futures and options connected to ICE’s California Cap and Trade, Regional Greenhouse Gas Initiative and renewable energy credits markets. Volume in the North American Environmental complex increased by approximately 30% in 2020 versus 2019.
In April 2020, ICE launched the ICE Global Carbon Futures Index to track and benchmark the global price of carbon. While in December 2020, ICE was appointed to host emissions auctions as part of the launch of a UK Emissions Trading Scheme (UK ETS). ICE plans to commence auctions and launch UK spot and futures carbon allowance contracts on ICE Futures Europe no later than the second quarter of 2021, subject to regulatory approval.
ICE has been a leader in environmental markets for nearly two decades. A wide and increasing group of stakeholders use the price signals from ICE’s global markets and indices to help assess climate transition risk in their portfolios, and access liquidity pools for compliance purposes, managing risk and allocating capital to benefit from energy transition opportunities.