New Ally in Climate Change Battle: Digital Natural Gas

 

Lower Methane Supply Chains for Multiple Industries

Reducing methane emissions is a critical part of wider global efforts to reduce carbon emissions and slow global warming. In parallel with the Global Methane Pledge, the Biden administration recently proposed rulemaking to sharply reduce methane and other pollutants from oil and gas operations.

Xpansiv’s MPC contracts, Cohen said, will be a useful tool for oil and gas producers to demonstrate measurable progress toward these commitments. In addition, utilities and industries that rely on natural gas—chemicals and steel, for example—can use MPCs to reduce their carbon footprints. MPCs also dovetail with rapidly growing interest in Environmental, Social, and Governance (ESG) investment.

“Any natural-gas buyer keen on meeting climate, net-zero objectives can use MPCs,” Cohen said. “MPCs offer a means to feed low-methane natural gas into their supply chains through a digital platform.”

CME Group works alongside Xpansiv on its Global Emissions Offset futures and Nature-Based Global Emissions Offset futures contracts, and welcomes the introduction of these new tools.

“We applaud Xpansiv for continuing to create new and innovative tools that help our clients navigate the energy transition,” said Peter Keavey, Global Head of Energy Products at CME Group. “We look forward to continuing to work together to build out the effectiveness of markets for risk management.”

MPCs are still new, but initial trading activity suggests strong interest and a large market for these types of products, Cohen said. In the first week of December alone, the exchange settled three MPC transactions of 1,400 contracts each, representing a total of 3.5 billion cubic feet of natural gas. Cohen estimated that about 4% of total North American gas production could be onboarded onto Xpansiv’s platform in the near-term, with potential growth projected throughout 2022.

Cohen, whose company Xpansiv also operates CBL, the largest spot exchange trading for carbon offsets, renewable energy credits, and water, said the potential in combining data, technology, and exchange-based models to reduce carbon output and combat climate change is still largely untapped.

“Our overall mission is to help markets accelerate the transition to a low-carbon economy across multiple sectors of the global economy,” he said. “We’re excited to be a part of it. It’s a tremendous opportunity.”

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