Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, today announced that it plans to begin carbon credit auctions for Permian Global, a leading developer of large-scale tropical forest protection and restoration projects. The auctions are expected to launch in 2022 and further details on timing will be announced in due course.
ICE will host auctions for Permian Global’s verified emissions reduction certificates (VERs), which are the quantifiable emissions that would have been released into the atmosphere had deforestation and forest degradation occurred.
“Natural ecosystems play a vital role in combatting climate change by removing excess carbon dioxide in the atmosphere,” said Stephen Rumsey, Chairman, Permian Global. “Given the urgency and the scale of the climate crisis, it is vital that financial markets become a driving force for positive change. As the world’s largest venue for pricing emissions and climate risk, we are delighted to find in ICE a partner that both understands the challenge ahead and is committed to play a key role in the solution through its auctions”.
Each Permian Global project is verified against robust third-party forest carbon standards by independent expert auditors. This includes providing evidence of additionality that without the project activity, the forest was at risk of deforestation or forest degradation; avoidance of leakage that the project activity has not displaced deforestation and hence emissions to another location; and permanence that the project and avoided emissions will not be reversed.
“The auctions will allow the market to value the forest projects of Permian Global and contribute to increasing the supply of high quality, credible and verifiable carbon credits,” said Gordon Bennett, Managing Director of Utility Markets at ICE. “By bringing transparency to the primary market, which will complement and support the growth of the secondary market, the new initiative between ICE and Permian Global can play an important role in the development of carbon credit markets globally.”
ICE Benchmark Administration (IBA), one of the world’s most experienced administrators of regulated benchmarks, is forming the ICE Carbon Oversight Committee to provide independent governance and oversight of ICE’s activities in the voluntary carbon markets. This will include advising on the criteria that carbon credits must meet to be sold through ICE’s auctions. In addition, ICE plans to launch its first Nature-Based Solutions carbon credit futures contract in the first quarter of 2022, subject to regulatory approval, which will be traded and cleared in London.
“We believe that IBA, as a regulated benchmark administrator, can help bring greater governance and oversight to the voluntary carbon markets”, said Tim Bowler, President of ICE Benchmark Administration. “Our work is designed to help give buyers of carbon credits confidence that credits purchased through the new auctions and futures contract will have environmental integrity.”
ICE offers customers access to the largest and most liquid environmental markets in the world to price climate risk. More than 14 gigatons of carbon trades on ICE annually, equivalent to approximately 40% of the world’s total annual emissions footprint based on current estimates.