In a world first, a carbon removal index has been launched on Nasdaq. The 24th March 2022 announcement by Nasdaq represents a significant step towards the creation of a transparent carbon removal market. Legitimate and verified markets encourage investors, financiers and companies to achieve net zero or carbon neutral impact.
Indices serve as important market indicators for evaluating the market behaviour and trends. [1] Through the creation of a carbon removal index, Nasdaq lends its expertise, global reach and reputation as a world leading global financial services company to the emerging carbon removal market. This reputational weight is particularly important given Nasdaq’s position as the worlds 2nd largest stock exchange, giving serious experience to the emerging carbon markets around the world.
The family of carbon removal indices on the Nasdaq will track the price of removing carbon dioxide from the atmosphere through CORCs issued by Puro.earth.
According to puro.earth, the family of carbon removal indices track the market price as a whole, and separate indexes specifically for bio-char, and bio-based construction materials as standalone indices.
“CORC Biochar Price Index (CORCCHAR) and the CORC Bio-based Construction Materials Price Index (CORCWOOD) reflect the price of removing one ton of carbon dioxide in the form of biochar and bio-base construction materials, respectively. The indexes will be updated monthly, and more indexes will be added to the family as the number of relevant transactions increases.” [2].
Figure 1: CO2 removal certificate weighted index family (CORCX) [2]
The carbon removal market index has a unique differentiator, tracking the price of removal not just temporary credits. According to puro.earth, the adaptable nature of the index will ensure relevance as new technologies emerge. This strategy will allow for specific components of the carbon removal market to be tracked. It also allows for future carbon removal technologies to be added to the family of indices as relevant markets emerge.
“Over time, as the voluntary market for carbon removal becomes more liquid, the reference price index family will serve as a platform to create innovative new financial products that support our journey towards a net-zero economy,” says Antti Vihavainen CEO of puro.earth [3]
Various carbon indices have recently been established. These indices essentially track the price of carbon credits. Examples include the Real Carbon Price Index by Monash /C2Zero, or carbon credit indices such as IHS Markit Global Carbon Index .
Voluntary carbon markets have experienced rapid growth in recent years, exceeding $1 billion in 2021 according to analysists from Ecosystem Marketplace. [4]. It is projected that total demand for voluntary carbon markets will increase 15-fold by 2030. Skyrocketing to 100 times current demand by 2050 [4].
With such demand for carbon markets, the CORCX index will be well positioned to track the growth of the carbon removal industry, crucial to climate and environmental action. The growth in future carbon markets is a reminder of the urgent need to remove carbon from the atmosphere in order to reduce the worst impacts of climate change on current and future generations. To limit global temperature rise to 1.5°C, we must ensure net zero carbon dioxide emissions by the early 2050s according to the IPCC [5]. Carbon removal is an important process in achieving this future goal.
Biocare is committed to empowering a sustainable future, of which carbon removal plays a crucial role. As many different industries play a critical role in reaching a cleaner future, we aim to stay ahead of the market and move from net-zero impact to net-positive impact.
[1] S&P Dow Jones Indices, “What is an Index?,” 2022. https://www.spglobal.com/spdji/en/research-insights/index-literacy/what-is-an-index/ (accessed Apr. 08, 2022).
[2] puro.earth, “Carbon price,” 2022. https://puro.earth/carbon-removal-index-price/ (accessed Apr. 08, 2022).
[3] Nasdaq, “Nasdaq Launches World’s First Index Family Focused on Carbon Removal,” 2022. https://www.nasdaq.com/articles/nasdaq-launches-worlds-first-index-family-focused-on-carbon-removal (accessed Apr. 08, 2022).
[4] S&P Global, “COP26: Voluntary carbon market value tops $1 bil in 2021: Ecosystem Marketplace,” S&P Global Commodity Insights, 2021. https://www.spglobal.com/commodity-insights/en/market-insights/latest-news/energy-transition/111121-cop26-voluntary-carbon-market-value-tops-1-bil-in-2021-ecosystem-marketplace (accessed Apr. 08, 2022).
[5] IPCC, “The evidence is clear: the time for action is now. We can halve emissions by 2030. ,” Apr. 04, 2022. https://www.ipcc.ch/2022/04/04/ipcc-ar6-wgiii-pressrelease/ (accessed Apr. 08, 2022).