A View From Above: Nodal Exchange Environmental Open Interest Tops a Quarter Million Contracts

Apr 26, 2023 | Blog

Dan Scarbrough, President & COO, IncubEx

Sometimes you need to reach a plateau to see how far you’ve climbed. Environmental markets on Nodal Exchange hit 250,000 contracts of open interest yesterday, marking a milestone that began with the first listings in November 2018.

The journey to date:

The significant rise of open interest on Nodal Exchange in carbon, renewable energy certificates (RECs) and renewable fuel credits tells a story on part of the journey traveled for exchange traded environmental markets.

IncubEx collaborates with Nodal, which now lists the most comprehensive slate of environmental futures and options products in the world, including more than 70 Renewable Energy Certificate futures, the only physically delivered renewable fuels futures contracts for LCFS and RINs and futures contracts on all 3 major North American carbon markets in California, RGGI and Washington.

Today, 31 states and the District of Columbia have Renewable Portfolio Standards that mandate targets from wind, solar and other energy sources. Many of those programs have led to the creation of futures contracts that allow customers to manage risk and their compliance needs on an exchange cleared market.

The North American compliance carbon markets – the Western Climate Initiative and Regional Greenhouse Gas Initiative – now has a third major market, the recently launched Washington Cap and Invest (WCA) program. Nodal listed the first WCA futures and options contracts, which are already showing significant interest and activity in the early days of America’s newest carbon market.

Market based solutions to environmental issues continue to expand across geographies and sectors. In conjunction with this, regulated futures markets across environmental commodities continue to develop in North America with a growing array of market participants, which helps these markets scale, thus accelerating the environmental objectives.

Environmental markets are building on a long track record of success but still have room for significant growth.

The quarter-million contract open interest milestone is a reflection of the continued support and confidence the trading community has in these markets. The next milestone only builds on that and encourages everyone to keep on climbing. Upward we go.