ICE sees traction in new EU emissions futures

The exchange saw the equivalent of 5,000 EUA2 allowances trading on the May 6. The contracts refence the EU Emissions Trading System 2 (ETS2) framework, which captures carbon dioxide emissions from fuel combustion in buildings and road transport. The updated methodology is set to become effective in 2027.

“The carbon price set by the EU ETS 2 can provide a market incentive for investments in building renovations and low-emissions mobility and by offering futures covering this new system, ICE is delivering price signals to customers who are mandated to account for the cost of pollution in these new sectors,” Gordon Bennet (pictured) global head of environmental markets at ICE said in a statement.

The listing sees ICE as the first major exchange to offer contracts based on the wider rules, which double the scope of the EU ETS to 80% of the EU economy, according to ICE estimates.

“The launch of the EUA 2 futures contract is a critical step in helping market participants prepare for the expansion of the EU carbon market,” Bartosz Wilamowski, head of sales for EU ETS at emissions specialist Vertis said. “We at Vertis see a growing interest from companies, particularly in sectors not currently covered by ETS1, as they assess the financial implications of future compliance.

“Unlike the early days of ETS1, we expect ETS2 to drive more immediate and material cost exposure. This new contract brings much-needed price transparency, enabling businesses to better plan and manage their carbon-related financial risks.”

Also supporting the launch are Macquarie, Mercuria, Trafigura, Global Factor, Statkraft and Mabanaft.

“ICE’s launch of an EUA 2 contract marks a significant milestone in the evolution of Europe’s carbon markets, enhancing price transparency and strengthening Trafigura’s ability to manage risk in sectors included in the new system,” Hannah Hauman, global head of carbon trading at Trafigura said.

Rival European Energy Exchange (EEX) will in July list its own EU ETS 2 futures in July, it said last week.