Data, technology, and market infrastructure provider Intercontinental Exchange (ICE) is detailing record North American environmental markets volume and participation, noting 270 companies traded last year.
According to ICE, the company offers customers the most liquid markets to trade futures and options on California Carbon Allowances, California Carbon credits, RGGI Allowances (RGA), California Low Carbon Fuel Standard (LCFS) Credits, and Renewable Energy Certificates (RECs).
“Net zero is predominantly an energy transition,” ICE Managing Director of Utility Markets Gordon Bennett said. “The price signals and liquidity of energy and environmental markets are at the heart of helping companies transition to alternative forms of energy by providing the tools to allocate capital and manage the associated price risk.”
Bennett said the transition to renewable electricity means RECs are key to any company wishing to comply with emission reduction commitments and serve as a hedging tool to reduce the price risks of balancing renewables supply and demand.
According to ICE, a record 5.67 million LCFS credits were traded on the company’s platform last year, representing more than five times the volumes in 2021. LCFS credit futures attained record volume, open interest, and participation in January of this year.
With regard to RGA, ICE indicated a record 406,876 futures and options contracts traded in 2022 – which represented an 18 percent increase over 2021.
“Companies operating under cap-and-trade programs are required to treat their emissions as liabilities, creating demand for carbon allowances to pay for the pollution they emit, and incentivizing companies to seek lower cost abatement opportunities,” Bennett said.