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Carbon Markets

Carbon markets are an important step on the journey to deliver on global net zero commitments.

S&P Global brings transparency to nascent carbon markets, enabling both voluntary and compliance markets to grow with infrastructure, price assessments, benchmarks, data and insight.

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What are Carbon Markets?

Carbon markets help to facilitate progress on global net zero commitments by enabling market participants to trade carbon allowances and carbon offsets via compliance and voluntary carbon markets. Carbon markets are expected to grow rapidly in the short term creating market opportunities and mobilizing investment, and diminish in the longer term as countries close in on net zero emissions.




  • What are Carbon Allowances?

    Carbon Allowances are used in compliance carbon markets where government organizations or regulatory authorities provide regulated companies a certain number of carbon allowances every year, allowing them to emit one tonne of CO2 per credit. Market participants, often including both emitters and financial intermediaries, can trade allowances to meet regulatory requirements (or for hedging or trading purposes). In the case of cap-and-trade programs, called Emissions Trading Systems (ETS), the limit on carbon emissions (i.e., the cap) slowly decreases over time.

  • What are Carbon Offsets?

    Carbon Offsets, traditionally used in voluntary carbon markets, enable companies (and individuals) to offset their carbon emissions by buying offsets that either reduce emissions (e.g. renewable energy) or remove emissions (e.g. reforestation). Carbon offsets have also been used in compliance carbon markets to satisfy a portion of cap-and-trade requirements.

"Putting a price on CO2 is the surest way to drive the energy transition, with a growing number of countries adopting emissions trading systems, carbon taxes or a combination of both."

S&P Global Commodity Insights

Atlas of Energy Transition

Accelerating carbon markets.
Creating clarity.

More established carbon markets will be increasingly connected, consistent and liquid, providing more robust opportunities for companies and countries to manage their transition to net zero, and more investable markets for financial institutions to manage risk-adjusted returns.

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Benefits of Carbon Markets

  • Role of carbon markets in reducing greenhouse gas emissions
  • Promoting clean technologies and sustainability
  • Financial incentives and opportunities for businesses



Compliance vs voluntary carbon markets: What's the difference?

Get ready for significant growth in carbon markets

While nascent today, carbon markets are projected to grow significantly providing important pathways for countries, corporates, and financial institutions to turn net zero commitments into net zero action plans.

Find out how we are bringing transparency to the nascent carbon markets with infrastructure, price assessments, index benchmarks, and data and insight.

  • INFRASTRUCTURE
  • PRICE ASSESSMENTS
  • INDICES
  • DATA AND INSIGHTS
SEE ALL SOLUTIONS

Discover integrated infrastructure solutions for carbon market

Environmental Registry

Manage carbon, water and biodiversity credits in a centralized, financial markets-based registry system, helping to increase transparency, efficiency and scalability.

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Meta-Registry

Seamlessly connect disparate markets and registry systems around the world, enabling the exchange of carbon market data and mitigating the risk of double-counting credits.

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Auctions Platform

Set prices for carbon allowances or credits via transparent market mechanisms with secure auctions technology including auction setup, participant application, bidding, price calculation, results generation, approvals and result distribution, as well as interfaces to third parties.

Discover Auctions Platform

Our carbon market price assessments offer essential price transparency

Carbon Allowance Price Assessments

Mandatory carbon market price assessments include evaluations of over-the-counter forward prices for December European Union Allowances (EUAs) and United Kingdom Allowances (UKAs), which are financial instruments used in these two carbon trading schemes.

Low Carbon Fuel Standard (LCFS)

These daily assessments evaluate carbon credits being purchased by producers of petroleum and diesel from producers of ethanol, bio diesel, hydrogen and electric charging to meet their deficit shortcomings. 

California Offsets

These look at physically delivered greenhouse gas emissions offset credits that are limited to emissions-reduction projects in the U.S. and specifically to five areas: forestry, urban forestry, destruction of ozone-depleting substances and mine methane capture.

Regional Greenhouse Gas Initiative (RGGI)

These look at the cooperative effort among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont and Virginia to cap and reduce CO2 emissions from the power sector.

Voluntary Carbon Market  

These assessments cover a full range of projects that reflect bids, offers and trades as reported in either the Commodity Insights Market on Close assessment process, the brokered market or on trading and exchange instruments. The assessments reflect the individual attributes of particular projects and are segmented into avoidance and removal credits. Additional assessments are available for the International Civil Aviation Organization’s CORSIA program, plus the most competitive methane collection carbon credits.

Carbon Credit Settlements and Assessments

S&P Global Commodity Insight’s partnership with the Xpansiv spot-market exchange provides assessments of the daily and monthly settlement prices for Xpansiv’s carbon credit contracts, as well as the settlement prices for physically-delivered futures contracts.

Our carbon market indices are designed to inform price discovery and increase liquidity

The Global Carbon Index

IHS Markit, now part of S&P Global, together with Climate Finance Partners (CLIFI), launched this first-of-its-kind index that tracks the most liquid segment of the tradable carbon credit futures markets. Constituents of the index include futures contracts on European Union Allowances (EUA), UK Allowances (UKA), California Carbon Allowances (CCA) and the Regional Greenhouse Gas Initiative (RGGI), with pricing data from OPIS by IHS Markit Pricing (North American Pricing) and ICE Futures Pricing (European Pricing). The Global Carbon Index rules-based methodology is publicly disclosed and designed to be replicable.

Explore Carbon Credit Index



The S&P GSCI Global Voluntary Carbon Liquidity Weighted

The S&P GSCI Global Voluntary Carbon Liquidity Weighted is designed to reflect the performance of the global voluntary carbon credit market. Index constituents are liquidity-weighted tradeable voluntary carbon credit futures contracts.

Explore S&P GSCI Global Voluntary Carbon Liquidity Weighted

Platts CARBEX Carbon Credit Indices (powered by Viridios AI)

These six indices reflect the value of different types of voluntary carbon credits and enhance market transparency in the complex voluntary carbon credit and co-benefit markets. Co-benefits are terms attached to carbon credits that provide evidence of meeting the 17 Sustainable Development Goals (SDGs) defined by the United Nations.

Explore Platts CARBEX Carbon Credit Indices

The S&P GSCI Carbon Emission Allowances

The S&P GSCI Carbon Emission Allowances (EUA) is designed to measure the performance of the European Union Carbon Emission Allowances (EUA) market.

Explore EUA Index

Our data and insights uncover the details behind the carbon market trends

Insights

Get the latest news coming out of global mandatory and voluntary carbon markets, including specific details on the short-, medium- and long-term outlooks for the mandatory carbon markets in each region.

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S&P Global Trucost Carbon Earnings at Risk Dataset

Quantify company-level exposure to current and future carbon pricing scenarios.

Find Out More on S&P Global Marketplace

S&P Global 1200
12.74%
$283.19B
Materials
40.07%
$71.48B
Utilities
74.89%
$92.74B
Energy
34.32%
$54.77B
Industrials
8.87%
$26.89B
Consumer Discretionary
3.12%
$9.11B
Consumer Staples
5.14%
$9.27B
Financials
5.77%
$7.58B
Real Estate
1.96%
$1B
Information Technology
1.68%
$4.46B
Communication Services
1.04%
$3.7B
Health Care
1.36%
$2.16B
Source: S&P Global Trucost. Data as at November 2020. For illustrative purposes. Data showcase is based on a high impact climate change scenario for companies listed on the S&P Global 1200 index, selected to represent a global supply chain, equity portfolio or loan book. The index covers 31 countries and approximately 70 percent of global stock market capitalization.
  • INFRASTRUCTURE
  • PRICE ASSESSMENTS
  • INDICES
  • DATA AND INSIGHTS

Challenges and Future of Carbon Markets

  • Ensuring transparency and integrity in carbon markets
  • Addressing market fluctuations and price volatility
  • Emerging trends and potential growth of carbon markets

Carbon market case studies

  • A Large Manufacturing Company Looks to Carbon Offsets to Meet its Net Zero Goals

    FIND OUT NET ZERO MANUFACTURING

  • A Bank Relies on Extensive Energy Data to Guide its Path to Net Zero

    Case Study

  • A REIT Digs Deep on Physical Climate Risks in its Portfolio

    Case Study

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Link sustainability data with financial data and market intelligence, and dig deep with screening tools, real time updates, data visualizations and customized dashboards.

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Carbon Markets FAQs

  1. What are carbon credits?
    Carbon credits are tradable permits representing the right to emit a certain amount of carbon dioxide or other greenhouse gases. Issued to companies or countries that reduce emissions, they can be bought by those exceeding their limits. Carbon credits promote environmental sustainability by creating a market for emissions reduction and mitigation efforts.
  2. What is voluntary carbon market?
    Voluntary carbon market allows individuals, companies, and organizations to voluntarily purchase and trade carbon credits to offset their own emissions. Unlike compliance mandatory carbon markets, participation is optional, and buyers engage for self-imposed sustainability goals. Voluntary carbon market fosters private-sector initiatives to address climate change by encouraging emission reductions and supporting environmental projects
  3. How does the carbon trading market work?
    In carbon trading, companies or countries receive a limited set of carbon credits, each representing a specific amount of emissions. Those exceeding their limits can buy credits from those with surplus. This creates a market where emission reduction efforts are financially rewarded, encouraging sustainable practices and fostering a global approach to climate change.