Emissions trading is the most efficient market-based instrument for reducing CO2 emissions gases. We put a price on carbon.
„For Germany to become climate-neutral by 2050, we not only need the energy transition, but also a transition of the heat and transport sector. This transformation will only succeed together with the energy industry. It provides the green electricity and the necessary energy infrastructure for its transport. In 2020, the CO2 emissions of the energy industry have already fallen by over 50 percent compared to 1990. We must now need follow this path with a view to tomorrow's mobility and heat supply. One instrument for this is CO2 pricing, which has also applied to the heating and transport sectors since January 2021. It is an effective lever to encourage climate-friendly behavior and thus further reduce emissions. Increasingly expensive CO2 emissions in these sectors will make investments in green alternatives more and more attractive.“
Chairwoman of the Executive Board of BDEW Bundesverband der Energie- und Wasserwirtschaft e.V. (German Association of Energy and Water Industries)
Introduction on Environmental Products
Trading in emission allowances is the core of our environmental product offering.
Emissions trading is a market-based approach to reduce emissions by putting a price on carbon. This ensures an economically most efficient decarbonization and provides market participants with a strong price signal to guide their economic activity and financial investments.
EUAs as nucleus for EU ETS
EEX operates spot and derivatives markets within the European Emissions Trading System (EU ETS) which was the first multinational emissions trading system launched in 2005. EEX Group has 15 years of experience in this market, offering trading from the very start.
Since 2010, EEX has been appointed as the Common Auction Platform, organizing primary auctions for EUAs on its exchange. Auctioning is the default method for allocating allowances in the EU ETS to the market for the first time.
Primary Auctions for EUAs
Auctions are a key element of allocating allowances to the market and are fundamental to the objective of emissions trading as it guarantees costs of carbon are internalized.
With auctions held on a daily, the entire primary market volume in Europe is auctioned via EEX on behalf of 27 participating EU member states as well as three EEA-EFTA states. Since its launch in 2010, EEX has generated a total revenue of more than 62.8 billion euros for the respective public auctioneers. A volume of 5.5 billion allowances has been sold in primary market auctions via the exchange so far.
In addition, EEX operates a growing secondary spot and derivatives market for EU Emission Allowances (EUAs) and EU Aviation Allowances (EUAAs) which ensures fast execution and at-the-market prices for customers as well as a secure and efficient delivery via the clearing house ECC.
Environmental Products for North America
As part of EEX Group, Nodal Exchange offers the largest set of environmental futures and options contracts for North America including emission allowances and renewable energy certificates.
The physically-settled environmental contracts offered on Nodal Exchange allow participants to fulfill regulatory compliance obligations while also benefiting from advanced risk management solutions and improved operational efficiency during the delivery process. Nodal Exchange, in cooperation with IncubEx, aims to develop and offer products and services that best meet the growing and evolving needs of the North American environmental markets. In 2020, Nodal Exchange launched eight new Renewable Identification Number (RIN) futures and options contracts, plus ten new Renewable Energy Certificate (REC) contracts. The RIN futures and options contracts are physically delivered and cover the most actively traded RIN markets: D3 RINs for cellulosic biofuels, D4 RINs for biomass-based diesel, D5 RINs for advanced biofuels such as sugarcane ethanol, and D6 RINS for renewable fuels such as corn ethanol. The newest REC futures and options contracts are the first of their kind on any exchange and build on Nodal’s unmatched suite of REC products.
„The environmental products we introduced in 2020 are examples of our continued efforts to innovate and meet customer needs in the marketplace. The new contracts, developed with IncubEx, further extend the broadest suite of exchange-listed environmental products in the world and build on the carbon emission allowances, renewable energy certificates, and renewable fuel credit futures and options available on Nodal. Nodal now offers 82 futures and options contracts on 51 distinct environmental markets. We are proud to be playing a role in efforts to improve our environment.“
Chairman and CEO
EEX actively supports CO2 pricing on a global level
EEX Group is a strong advocate and active supporter of increased cooperation and mutual learning as a key policy tool to achieve global emissions reduction targets.
EEX Group actively supports market mechanisms for CO2 pricing by engaging with partners worldwide to establish and develop their emission trading systems. In China, for example, EEX is working in cooperation with local partners, with a view to facilitating access to the Chinese carbon market. This also includes a partnership of EEX and the New Zealand Exchange (NZX) which has been selected to develop and operate the managed auction service for the New Zealand’s Emissions Trading Scheme, with the first auction being held in March 2021.