Nasdaq has launched the world’s first commodity reference price indices tracking the price of removing carbon dioxide from the atmosphere.
Effective 24 March, the three indices track the price of different Carbon Removal Certificates (CORC) which are tradable digital assets representing a tonne of CO2 that has been removed from the atmosphere.
The certificates are provided by Nasdaq majority-owned Puro.earth, the world’s first business-to-business marketplace, standard and registry focused on carbon removal.
The CORC Carbon Removal Price index (CORCX) is the suite’s headline act and reflects the cost of sequestering a tonne of carbon-based on an aggregate of CORC transactions from all engineered carbon removal methods supported by Puro Standard.
The CORC Biochar Price index (CORCCHAR) and the CORC Bio-based Construction Materials Price index (CORCWOOD) reflect the price of removing one tonne of carbon in the form of biochar and bio-base construction materials, respectively.
Biochar is a solid form of carbon created through a high-temperature decomposition process called pyrolysis. It is used to improve water quality, reduce soil emissions and acidity, reduce nutrient leeching and reduce the need to use fertiliser and irrigation.
Bio-based construction materials include wood from sustainable forestry and other fast-growing and carbon-capturing plants used as building elements in housing construction.
Puro.earth identifies companies creating products or processes that sequester carbon and then uses an independent third party to verify the net negative carbon emissions before issuing CORCs related to these activities.
The new indices will update monthly with more to be added as the number of relevant transactions increases.
The voluntary carbon market broke through $1bn in value for the first time in 2021, according to S&P Global. The Taskforce on Scaling Voluntary Carbon Markets expects this to grow to at least $5bn by 2030.
Commenting on the launches, Fredrik Ekström, head of European fixed income and ESG at Nasdaq, said: “The indices will create a price benchmark to help our clients better understand the true cost of neutralising 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.”
Antti Vihavainen, CEO of Puro.earth, added: “The indices 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.”
The introduction of these indices represents another step for emissions management in indexed products and follows the launch of Europe’s first physical carbon credit exchange-traded product (ETP), the SparkChange Physical Carbon EUA ETC (CO2), and first carbon-offset ETF, the HANetf S&P Global Clean Energy Select HANzero UCITS ETF (ZERO).