AirCarbon, a Singapore carbon exchange, is working with Germany’s main bourse to launch futures trading for carbon offsets, as reported by Bloomberg on May 8, 2022. The futures contracts will be traded on the European Energy Exchange beginning as early as this year. The offer aims to help meet the growing demand from companies who want to hedge their greenhouse gas emissions (GHG) risks. Under the partnership, the futures contracts will comply with the carbon offset scheme set up by the International Civil Aviation Organization to help airlines mitigate emissions. The futures contracts can help companies and investors mitigate future price risk for carbon offsets.

As companies strive to meet net-zero or carbon reduction targets, carbon offsets are increasingly popular as an instrument to help them balance their emissions. According to research from BloombergNEF, the market for carbon offsets has the potential to go beyond USD100bn. Singapore’s AirCarbon was founded in 2019 and started trading in 2021. Currently, it has more than 120 active firms, with over 200 additional companies in various stages of joining. By now, the exchange has seen over 10m carbon credits transacted, with 1m carbon credits swapped over in the last two months alone. It is expected that the trading volume of carbon offsets will triple by the end of this year.

Sources:

https://www.bloomberg.com/news/articles/2022-05-08/singapore-exchange-targets-futures-trading-for-carbon-offsets

https://www.theedgemarkets.com/article/singapore-exchange-targets-futures-trading-carbon-offsets

https://www.marketsmedia.com/cme-to-launch-cbl-core-global-emissions-offset-futures/

https://www.afr.com/world/asia/singapore-exchange-targets-futures-trading-for-carbon-offsets-20220509-p5ajn4