The first ever index for tracking the global price of carbon credits has been launched by IHS Markit, allowing investors to access opportunities arising from “a primary strategy for reducing carbon emissions”.
IHS Markit's Global Carbon index, which combines proprietary information and futures markets data, tracks the performance of the largest, most liquid and most accessible tradable carbon markets: the European Union Emission Trading System, the California Cap-and-Trade Program, and the Regional Greenhouse Gas Initiative.
The index currently values carbon credits at $23.65 and shows that to date investors would have seen a return of 132% if they had invested at the beginning of 2018.
It is calculated using Oil Price Information Service (OPIS) data and carbon credit futures pricing in those markets.
The number of global jurisdictions with carbon pricing mechanisms has increased by more than a third to 57 countries since 2017, according to IHS Markit.
It said: "Putting a price on carbon dioxide emissions through cap and trade programs and other market-based mechanisms is a primary strategy for reducing carbon emissions."
Co-founder of Climate Finance Partners, which partnered with the index provider for the launch, Eron Bloomgarden said it "creates an important benchmark which helps financial institutions to better assess and price climate-related financial risks".
He added: "We see growing investor interest in carbon credits as an asset class."
Sophia Dancygier, managing director and head of indices at IHS Markit, added: "The IHS Markit Global Carbon 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.
"It also demonstrates our ability to apply our expertise in data, energy and other major industries and capital markets to develop unique products to address the most pressing and complex information demands within business today."