Data analytics and index provider IHS Markit has launched the first benchmark for the global price of carbon credits. A carbon credit is a permit representing the right for a company to emit one tonne of carbon dioxide.
Worldwide, 57 jurisdictions implement a carbon pricing mechanism in a bid to reduce the respective region’s carbon emissions. The IHS Markit Global Carbon index enables institutions to better asses and price climate-related financial risks.
The launch of the IHS Market Global Carbon index follows several collaborations with the company’s indices, environmental and energy businesses including OPIS, the energy price reporting arm of the firm.
OPIS provides the data for the index along with the carbon credit future pricing in the world’s most popular carbon markets.
IHS Markit partnered with Algo-Chain back in June to provide ETF and index analytics.
The index tracks the performance of the largest and most tradable carbon markets such as the European Union Emission Trading System (EU ETS), the California cap-and-trade program and the regional greenhouse gas initiative.
Sophia Dancygier, managing director and head of indices at IHS Markit, said in a statement: “The index creates a valuable new benchmark for corporations, investors and financial services firms, all of which have to navigate the emerging but increasingly important markets for carbon credits.”