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LONDON: September 25, 2019. IHS Markit has launched a benchmark index for the global price of carbon credits, developed in conjunction with Climate Finance Partners.

According to its new 'IHS Markit Global Carbon Index', the global weighted average price of carbon credits is US$23.65. The company says since the beginning of 2018, the total return potential for investors in global carbon has been132 percent,

china carbonThe design, construction and administration of the new index is a result of extensive collaboration among the firm’s Indices, Environmental and Energy businesses, including OPIS, the company’s energy price reporting arm, which offers data and pricing services to help businesses manage costs and risks associated with national and regional environmental compliance programs.

The index tracks the performance of the largest and most accessible tradable carbon markets including the European Union Emission Trading System (EU ETS), the California Cap-and-Trade Program and the Regional Greenhouse Gas Initiative (RGGI). The index is calculated using OPIS plus data and carbon credit futures pricing in those markets.

With 57 jurisdictions employing carbon pricing mechanisms, up 34 percent since 2017, IHS claims putting a price on CO2 emissions via cap and trade programmes is a primary strategy for reducing carbon emissions.

“The IHS Markit Global Carbon index creates an important benchmark which helps financial institutions to better assess and price climate-related financial risks,” commented Eron Bloomgarden, co-founder of Climate Finance Partners. “We see growing investor interest in carbon credits as an asset class.”

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