Carbon-smart organizations integrate emissions-related data and information into operational and financial decision-making. A carbon intelligent business develops and deploys a series of capabilities that allow it to identify, prioritize, execute and scale decarbonization interventions across its supply chains, operations or products and services, in an effective and efficient manner.
Those companies that can make decisions on carbon performance in the same way they do for financial and operational matters will be in a much stronger position to demonstrate how and why their actions generate value for shareholders and stakeholders.
For example, S&P Global Platts and Xpansiv launched a new benchmark for methane performance in natural gas production in the United States. Methane Performance Certificates (MPCs) allow a U.S. producer to differentiate and accurately price cleanly produced, or responsibly sourced natural gas. The production and transportation of natural gas can emit large volumes of methane — a substantially more potent greenhouse gas than carbon dioxide. MPCs provide a tradable instrument for achieving a lower intensity, unlocking the market value of reducing the impact of gas production. We are already seeing this concept extend to other energy and materials commodities as well, from steel to hydrogen.
Xpansiv, the premier market-infrastructure platform for environmental commodities, announced first trades of the Sustainable Development Global Emissions Offset™ (SD-GEO™) on Xpansiv market CBL. Participants supporting the contract include South Pole, BMO, Carbon Growth Partners, Hartree Partners, EKI Energy Services Limited, and ICAP Energy LTD. First day volume totaled 210,000 mtCO2e, an all-time high for a product launch, with prices ranging between $10.50 and $11.00.
“The launch and first trade of the SD-GEO demonstrate the ability of the voluntary carbon market to advance both climate mitigation and sustainable development at the same time,” said Verra CEO David Antonioli. “Verra is committed to supporting the market by ensuring the quality and integrity of the units it issues and ensuring that projects generating sustainable development benefits can showcase those impacts.”
Several companies traded Xpansiv CBL’s new standardised contract for cookstove offsets on its launch day on Monday, with units representing some 210,000 tonnes of CO2e changing hands. Large project developers such as South Pole and EKI Energy Services, as well as investors such as Carbon Growth Partners, Hartree Partners and BMO, a US bank, and the intermediary ICAP Energy traded the Sustainable Development Global Emissions Offset (SD-GEO), with prices ranging from $10.50 to $11.
“Clean cookstoves not only mitigate emissions, but they also bring improvements to the developing world—a global mandate on the heels of COP27,” said Russell Karas, Xpansiv’s head of carbon market development.
Henrik Hasselknippe, head of markets at carbon exchange Xpansiv, said a “culture of transparency” has evolved. “For example, the registries that issue credits make full project documentation available on their websites. In addition, they often share the name of the owners that ultimately claim the credits, providing an end-to-end view of the provenance, transfer, and retirement of a given carbon credit. That level of transparency is rare in any market.
“In addition, many companies provide detailed data on their carbon credit use in corporate sustainability reports. And uniform disclosure standards contemplated in current regulatory proposals would bring a level of uniformity to reporting, which—done properly—would be a welcome development, from our perspective.”
Another vital factor, Hasselknippe added, that has improved trust, scale and liquidity in the VCMs was the launch of the Global Emissions Offset suite of standardised contracts. “The establishment of these kinds of benchmarks is a key step in the evolution of any market.”
Xpansiv subsidiary CBL announced the launch of a new spot contract for the clean cookstoves sector following an expansion in market liquidity and an expected rise in credit issuances over the next few years. The new contract will be called Sustainable Development Global Emissions Offset (SD-GEO) and will start trading on December 5.
It adds to CBL’s existing suite of benchmarks, which also includes the Global Emissions Offset (GEO), launched in 2020, the Nature-based Global Emissions Offset (N-GEO), unveiled in 2021, and the Core Global Emissions Offset (C-GEO), which was started earlier this year.
“Corporates often look for offset projects that mitigate emissions while also having co-benefits for local communities—projects like clean cookstoves,” said Russell Karas, Xpansiv Head of Carbon Market Development. “This emerging segment of the carbon market will grow exponentially in the coming years, and Xpansiv offers a better way to price and trade these high-quality credits.”
Market infrastructure provider Xpansiv has been granted an Australian financial services licence that will allow it to launch Australian Carbon Credit Unit (ACCU) products on its CBL platform.
“ACCU contracts play an important role in facilitating the growth and legitimacy of carbon markets in Australia. With CBL’s experience developing these markets and similar products — more than 90% of spot exchange-traded carbon credits globally are transacted on CBL — it will actively support and promote that growth,” Xpansiv said.
Speaking to Carbon Pulse on the sidelines of the ongoing Australasian Emissions Reductions summit in Sydney, [Xpansiv CCO Ben Stuart] said he expected entities to use the platform as a data information hub. “Once we start to get transactions through the platform, I think we will have a very rich data set that will allow people to derive forward price curves and allow the market to look at doing structured products on the back of our data sets.”