IntercontinentalExchange (NYSE:ICE) (ICE), a prominent provider of data, technology, and market infrastructure, has revealed its plans to launch the first environmental futures market based on Alberta's carbon program.
The market, set to be launched the company’s physical energy exchange and clearing house, 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 entities to engage in buying, selling, and hedging their exposure to carbon credits within Alberta's Technology Innovation and Emissions Reduction (TIER) program, according to a statement from ICE.
The Alberta TIER program is a regulatory framework aimed at managing greenhouse gas emissions. Under the program, entities that meet certain criteria, such as emitting 100,000 tons or more of carbon dioxide equivalent per year or importing more than 10,000 tons of hydrogen annually, are obligated to comply with annual emissions reduction targets.
The compliance market established by the TIER program allows covered entities to participate in a system where they can meet their obligations through various means, including purchasing emissions offsets or performance credits. These credits represent reductions in greenhouse gas emissions achieved through eligible projects.
By offering price transparency and attracting new participants, ICE said it hopes to enhance liquidity and capital efficiency for clients while meeting the requirements of Alberta's environmental program.
IGX NGX president Greg Abbott highlighted the advantages of the Alberta carbon futures market.
“An Alberta carbon physical futures market brings price transparency and attracts new participants, while allowing clients to access greater liquidity and capital efficiency,” Abbott said.
“Alberta TIER coming to ICE means these contracts will be traded alongside ICE’s global environmental and energy benchmarks across carbon, oil, natural gas, and power, and cleared alongside Alberta natural gas and electricity.”
ICE NGX has been operating Alberta's natural gas and electricity futures markets for almost three decades, establishing the AB-NIT hub as one of North America's most liquid energy markets.
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