Nord Pool plans carbon indexes
London, 8 May: Nordic power bourse Nord Pool is planning to launch carbon indexes later this year, CEO Torger Lien told Carbon Finance yesterday.

The indexes will be based on the exchange's EU Emissions Trading Scheme (ETS) allowance and certified emission reduction (CER) contracts, he said, although the exact vintages and weightings are yet to be decided. The exchange will market the indexes globally, targetting financial investors looking for exposure to the price of carbon.

The indexes will be launched following the exchange's merger with OMX Nasdaq, scheduled to take place in the third quarter.

"Everything is signed now [for the merger]," he said, adding that the plans are awaiting regulatory approval.

The exchange is also considering launching voluntary emission reduction (VER) contracts post-merger. "In the US, VER is the only thing that makes sense," Lien said. He added that expansion into the US market was "the whole idea" behind the merger.

CERs are the carbon credits issued by Clean Development Mechanism (CDM) projects, under the auspices of the Kyoto Protocol. VERs can be issued by emission reduction projects that don’t qualify under the CDM, and typically trade at a discount to CERs.

Nord Pool currently lists EUA and CER futures contracts, which are aimed predominantly at companies within the EU ETS, or that are generating or trading CERs.