NEW YORK and SAN FRANCISCO and SYDNEY, Oct. 5, 2020 /PRNewswire/ — XCHG, the global marketplace for Intelligent Commodities™, today announced the first trades of the Global Emissions Offset (GEO) on XCHG subsidiary CBL Markets. Counterparties supporting the contract on the landmark trading day included Macquarie Group Limited (Macquarie) and AitherCO2, a financial services provider for the world’s environmental and energy markets.
Announced last month, the GEO™ contract sets a price on carbon based on real-time transactions. The GEO is based on parameters defined by the International Civil Aviation Organization (ICAO) for CORSIA—the Carbon Offsetting and Reduction Scheme for International Aviation. The contract standardizes and streamlines the purchasing of offsets, making it simpler to sort through a complex range of options. By meeting criteria established by ICAO’s multi-year vetting process, the GEO scales the global voluntary carbon market.
“Macquarie is an active participant in the energy transition, and sees the potential of the GEO to provide a leading global carbon product,” said Scobie Mackay, a Managing Director in Macquarie’s Commodities and Global Markets group. “We believe that a baseline contract for CORSIA-compliant offset volumes will provide market participants with a simplified method of transacting high-quality carbon offsets, better enabling them to provide differentiated value to the spectrum of available offset types. We see the GEO as a key step in the evolution of the voluntary carbon market.”
The GEO contract was designed with input from financial institutions, trading firms, project developers, NGOs, industry associations, corporations, and carbon-standards organizations like Verra, the non-profit organization behind the Verified Carbon Standard (VCS)—part of the constellation of CORSIA-approved standards underpinning the GEO.
“The GEO is an important milestone that brings transparency to the voluntary carbon market,” said David Antonioli, Verra CEO. “It gives stakeholders more confidence, which should encourage more participation and reinforce the fact that the voluntary carbon market provides a clear path to climate action.”
These initial transactions signify market acceptance of the GEO contract as a benchmark that brings scale, transparency, and liquidity to voluntary offset markets worldwide. The GEO provides a clear price signal on carbon that is relevant to all industrial sectors and simplifies purchasing decisions.
“GEO pricing is set by trades on CBL Markets, which reflect the real costs of abating emissions,” said Ben Stuart, XCHG Chief Commercial Officer. “As a result, the GEO enables meaningful price discovery, which will drive greater participation across all sectors in the offset market. Developing a trusted contract like the GEO ensures efficient project financing, price discovery, and risk management. It also allows for the emergence of enhanced hedging instruments and basis trading of other offset types.”
The arrival of this benchmark product follows the XCHG announcement of daily spot pricing for global RECs and carbon offsets, which translates ESG spot market price data into high-quality reference products, enabling markets to accurately price ESG factors.
Xpansiv CBL Holding Group (XCHG) is the world’s first commodity marketplace built for a data-rich, resource-constrained world. We bring transparency to global markets through innovative, ESG-inclusive commodity products and price information. In January of 2020, XCHG announced the closing of a strategic funding round from BP Ventures, Oxy Low Carbon Ventures, and Macquarie Group Limited. XCHG.net
About CBL Markets
XCHG company CBL provides access to the world’s energy and environmental commodity markets, facilitating the secure and seamless trading of commodities like carbon, renewable energy, water, and gas. cblmarkets.com
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