- Worldscale Association Ltd selects ICE’s European Carbon Allowance (EUA) futures settlement price as the benchmark carbon price for 2025 tanker freight rates.
- ICE’s EUA futures are the most liquid carbon market globally, underpinning the European Union’s Emission Trading System (EU ETS).
- The adoption reflects the maritime sector’s shift toward integrating carbon pricing into freight calculations under EU ETS regulations.
- ICE’s wet freight futures and options markets continue to see record growth, highlighting its role as a leader in energy and environmental markets.
As reported by Business Wire, Intercontinental Exchange, Inc. (NYSE: ICE), a global leader in technology and data solutions, announced that Worldscale Association Ltd, a leading provider of tanker freight rate references, has chosen ICE’s European Carbon Allowance (EUA) futures settlement price as the benchmark carbon price for 2025 freight rate calculations. This collaboration underscores the pivotal role of ICE’s EUA futures in the maritime sector, particularly under the EU’s Emission Trading System (EU ETS).
Role of ICE’s EUA Futures in the Maritime Sector
ICE’s EUA futures and options market is recognized as the most liquid carbon market in the world. Serving as the benchmark for the EU ETS, it provides a transparent and reliable carbon price, enabling the maritime industry to comply with regulations that require accounting for carbon emissions at EU ports.
Integration with Worldscale’s Freight Rate Calculation
Worldscale’s tanker freight flat rates encompass expenses such as bunker prices, port fees, and exchange rates. For 2025, the carbon cost will be calculated using the average daily settlement price of ICE’s EUA futures December 2024 contract between October 1, 2023, and September 30, 2024. This ensures an accurate and transparent integration of carbon pricing into shipping cost assessments.
Industry Insights and Collaboration
Ian McCarthy, Managing Director of Worldscale, emphasized the need for a transparent and liquid carbon market, citing ICE’s European carbon benchmark as the ideal choice. Jeff Barbuto, Global Head of Oil Markets at ICE, highlighted the company’s collaboration with the maritime industry to provide tailored solutions for freight markets and related derivatives to manage price risks under the EU ETS.
ICE’s Expansive Energy and Environmental Markets
ICE’s expertise extends beyond carbon markets to wet freight futures and options, helping customers manage price risks associated with oil shipping. These offerings are interconnected with ICE’s portfolio of over 800 oil-related products, including ICE Brent, the pricing benchmark for 75% of the world’s internationally traded crude oil.
In November 2024, ICE’s wet freight futures and options market reached record open interest, peaking at 181,152 contracts on November 22. This growth aligns with the broader expansion of ICE’s environmental markets, where open interest increased by 28% year-over-year.
Conclusion
The decision by Worldscale to adopt ICE’s EUA futures as the benchmark for 2025 tanker freight rates reflects the maritime sector’s increasing commitment to integrating carbon pricing into operations. ICE’s leadership in energy and environmental markets ensures the industry can navigate evolving regulations while effectively managing price risks.
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Source: Business Wire
