Capital markets technology and exchange company Nasdaq announced the launch of the world’s first commodity reference price indexes tracking the price of removing carbon dioxide from the atmosphere. The indices will follow the price of CO2 Removal Certificates (CORCs) issued by carbon removal marketplace Puro.earth.
Demand for carbon offset projects that counteract the release of greenhouse gases, and related credits, is expected to increase significantly over the next several years, as companies and businesses increasingly launch net zero ambitions, and turn to offsets as a bridge to their own absolute emissions reduction efforts, or to balance difficult to avoid emissions.
The market for carbon credits, however, is challenged by problems including a lack of liquidity, and insufficient or inconsistent data to assess the effectiveness of the projects. Nasdaq stated that its index launch aims to support standardization and transparency in the carbon removal market in order to encourage investment and support project financing decisions.
Fredrik Ekström, Head of European Fixed Income and Environmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. More at Nasdaq, said:
“This new family of indexes creates a reference price for carbon removal and represents another step forward in Nasdaq´s journey to create a transparent and robust market for carbon removal together with Puro.earth. The indexes will create a price benchmark to help our clients better understand the true cost of neutralizing their emissions. They will also serve to stimulate the growth of the carbon removal ecosystems by supporting the business case for new carbon removal projects and help potential investors make better informed decisions.”
The launch follows the acquisition of Puro.earth by Nasdaq in June 2021. Founded in 2019, Puro.earth is the world’s first B2B marketplace, standard and registry focused solely on carbon removal. The platform platform brings together suppliers of carbon net-negative technologies and companies looking to reduce or counter their carbon footprints, through the issue of verified CO2 Removal Certificates, a carbon offset based on carbon removed from the atmosphere for the long term.
Antti Vihavainen, CEO of Puro.earth, said:
“This launch marks an exciting moment for the voluntary carbon market. The indexes will give visibility into the trends of carbon removal credit pricing to climate finance stakeholders and have the potential to pave the way for the commoditization of CORCs. Over time, as the voluntary market for carbon removal becomes more liquid, the reference price index family will serve as a platform to create innovative new financial products that support our journey towards a net zero economy.”
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