Australia’s biggest listed companies would do well to take note of the latest figures out from Xpansiv, the global marketplace for ESG-inclusive commodities. In a report released on Friday, Xpansiv announced that its CBL platform, “the world’s largest exchange for trading carbon credits, renewable energy certificates, water entitlements, and digital fuels,” saw its carbon credit volumes soar 292% year-on-year.

Volumes have now already exceeded 100 million tonnes year-to-date. This comes, in part, as ever more companies are working to get ahead of the net-zero carbon goals promised by their governments in line with the Paris Climate Agreements.

A benchmark price for carbon credits – known as CBL GEO – has galloped from about $US75¢ last October to more than $US7.50 at the end of last month.

“The market has already woken up and realised there’s a very interesting asset class here and COP26 just happens to be a catalyst to talk about it,” said Ben Stuart, who co-founded CBL, a global exchange for energy and environmental commodity assets. The firm’s GEO contracts, which aim to provide a transparent and tradeable benchmark for the global carbon market, have since October 2020 become the world’s best performing commodity, Stuart said.

Volumes have also surged. Last year, CBL traded carbon credits accounting for 30 million tonnes. That has jumped to 100 million tonnes so far this year. Mr Stuart agreed that supply of carbon credits “is definitely tightening up” as companies hoover up credits to meet their decarbonisation promises. “It was not so long ago that we’d talk to talk companies, and they’d ask us what an offset is.”

“It’s been helped by things like COP and Glasgow, but it’s actually driven by financial markets, by banks, lenders and financiers looking for more favourable rates, and being able to display ESG credentials,” Mr Stuart said. “That’s driving the market more than regulation.”

Xpansiv is the world’s leading exchange for trading ESG assets, which include carbon, water, electricity and fuels. It provides a vertically integrated solution for trading, clearing, settlement and registry. It effectively is like the ASX, Computershare and Bloomberg all combined for these ESG commodities. What is so exciting about Xpansiv is that it is a globally leading exchange in an emerging and fast-growing asset class.

The carbon market currently is worth $1.5 billion and is expected to grow to $485 billion by 2030 and $3.9 trillion by 2040. There is also expected to be a cumulative US$56 trillion-dollar investment in green infrastructure globally to meet net-zero by 2050. Xpansiv’s positioning as the leading exchange in ESG commodities will benefit from these investments and tailwinds. The company has developed a unique ecosystem with $10s of billions of registered assets and over 1000 companies. This facilitates the management of derivatives, benchmarks and data products.

Xpansiv has built a data framework to allow market participants to understand the environmental impact of activities such as mining, production, and refining. It links this data with IoT and big data tools and registers that information as a digital asset known as “digital feedstock”. This will allow the producers to sell both the fuels themselves as well as the record of the ESG attributes of those fuels. Revenue has been growing at a compounded annual growth rate of 80% over the past few years and is expected to grow to more than $100 million next year.

SUMMARY: Methane performance certificates seek to monetise low emissions gas production.

Canada’s Pacific Canbriam Energy is part of an inaugural trade of methane performance certificates (MPCs), tradeable instruments intended to unlock the market value of reducing the environmental impact of natural gas production. Macquarie Energy Canada arranged the first MPC trade between Pacific Canbriam, active in the low-carbon Montney natural gas play in northeast BC, and industrial gas customer Skeena Bioenergy, which manufactures wood pellets for export.

S&P Global Platts, working with Xpansiv, a global marketplace for ESG commodities, designed the MPCs, which are issued against natural gas production that has a methane intensity of less than 0.1%. Gas production below the threshold would receive MPCs representing a percentage of methane intensity below the industry average, which currently stands at 0.437% for natural gas produced in Canada and the US.

On Monday, “intelligent commodities” pioneer Xpansiv, together with energy and commodity data provider S&P Global Platts, announced a first-of-its-kind benchmark certification for methane performance in U.S. natural gas production. These so-called Methane Performance Certificates (MPCs) will allow U.S. natural gas producers to sell financial instruments representing zero methane emission natural gas production.

In order to create the MPC, Xpansiv had first to create Digital Natural Gas (DNG) units, which are digital representations of the complete physical and energy profile of natural gas, creating a blockchain-based chain of provenance back to a specific source, verified using third-party standards, protocols and certifications. The MPC’s are then recorded on Xpansiv’s digital registry, which is based on the methane-emissions intensity of the gas produced, providing a fungible Methane Performance Certificate that both incentivizes and provides a clear price signal for lower-carbon natural gas production.

Shale gas drillers can now trade credits for curbing emissions of one of the most potent agents of global warming. Methane emissions of just 0.1% or less during natural gas production will earn explorers Methane Performance Certificates under an an electronic credits system launched by Xpansiv and S&P Global Platts.

The first MPC will be transferred between Pacific Canbriam Energy and industrial gas customer Skeena Bioenergy Ltd, a manufacturer of wood pellets. On Oct. 15, Platts assessed MPCs at $6.29 per metric ton of CO2 equivalent.