CFTC

EEMAC MEETING

NOVEMBER 7TH, 2019
About

 IncubEx is an incubator for exchange traded products, services, & technology 

solutions.

 The company works with its partners, other industry leaders & stakeholders to design & 

develop financial products in global environmental markets.

 IncubEx & EEX Group (including Nodal Exchange), entered a global partnership in 

2017 

 The IncubEx team is comprised of former key Climate Exchange executives and 

industry veterans.

 The company was founded in 2016 & currently has offices in Chicago and London. 2
Environmental Markets History 1960-2005 

1960

Dr. Ronald H Coase "The 

Theory of Social Cost"

1968 

John Dales "Pollution, 

Property and Prices..."

1970s 

Emissions averaging and 

netting concepts

1983

Phase-out of lead in 

gasoline

1986 

U. S. EPA Emissions 

Trading Policy 

Statement

1990

U.S. Clean Air Act 

Amendments

1994 

Los Angeles RECLAIM

1995 

U.S. SO2 Allowances: 

Acid Rain Program

1997 

SF Bay Area Banking 

Program

1997 

Kyoto Protocol

1998

NOx SIP Call Final Rule 

Published

1999 

New Jersey Renewable 

Portfolio Standard (RPS) 

adopted

1999 

TX adopts the Goal for 

Renewable Energy, 

creating an RPS in TX

2001 

E.U. Guarantee of Origin

2002

Houston area/TCEQ

2003 

Chicago Climate 

Exchange

2003 

U.S. NOx Budget Trading 

Program

2004 

Chicago Climate Futures 

Exchange launches first 

Enviro Futures

2005 

E.U. ETS 

Phase I

Environmental Markets Roots 1960 - 2005

3
Environmental Markets History 2005-Present

2005 

Renewable Fuels 

Standard created by 

the Energy Policy Act

2006 

Renewable Fuels 

Standard goes into 

effect

2006 

California Global 

Warming Solutions 

Act of 2006 (A.B. 32)

2007

RFS expanded under 

the Energy 

Independence & 

Security Act

2007 

Western Renewable 

Energy Generation 

Information System

2008

Western Climate 

Initiative (WCI) 

Design 

Recommendations

2008 

E.U. ETS Phase II

2008

U.S. Clean Air 

Interstate Rule: 

Annual and Seasonal 

NOx

2009 

Regional Greenhouse 

Gas Initiative (RGGI) 

1st Compliance Year

2010

New Jersey Solar 

specific provision 

under NJ RPS (A.B. 

3520)

2011 

California Low Carbon 

Fuel Standard

2011

California PUC issues 

decision authorizing 

TRECs

2012 

E.U. aviation CO2

2012 

U.S. EPA Cross-State 

Air Pollution Rule

2012 

New Jersey 

Withdraws From 

RGGI

2013 

California Cap and 

Trade Program 1st 

compliance year

2013 

Quebec Cap and 

Trade Program 1st 

compliance year

2014 

California and 

Quebec Cap and 

Trade Programs Link 

under WCI

2015

California Cap and 

Trade expanded to 

Fuels

2016 

International Civil 

Aviation Organization 

adopts CO2 Offsetting

2017

Ontario Cap and 

Trade Program 1st 

Compliance Year

2018 

Ontario Withdraws 

From WCI

2019 

New Jersey Rejoins 

RGGI

Environmental Markets History 2005- Present

4
MARKET-BASED SOLUTION FOR U.S. ACID RAIN

5

Source: U.S. EPA
 Market based solutions have a proven track record of success and are increasingly the policy tool of choice to 

solve environmental challenges.

 Roughly 3 billion tons of CO2 emissions are currently regulated under compliance emissions trading regimes 

versus global emissions of over 40 billions tons

 29 States + DC have Renewable Portfolio Standards

 Renewable Fuel Standard is federally mandated and low carbon fuel standards are expanding in North America

 Total Global Environmental Open Interest has increased over 4x from 650k lots in 2009 to 2.8M lots now

 Source: ICE, EEX, CME & Nodal Exchange

 US Environmental Open interest has grown dramatically from 100k contracts to over 900k lots currently

 Source: ICE, EEX, CME & Nodal Exchange

6

Growth of Environmental Markets
US Renewables Versus Coal Power 

Generation

In April 2019, US monthly 

Electricity Generation From 

Renewables Topped Coal 

23% V. 20%

Source: EIA: U.S. electricity generation from renewables 

surpassed coal in April, EIA Statistics

417.7 427.3

513.3

494.5 522 538.5 544.2

609.4

686.6 712.7

1,776

1,847

1,733

1,514

1,581 1,582

1,352

1,239 1,206 1,146

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

MMWh

Total US Renewable Generation (MMWh) Coal Generation (MMWh)

Linear (Total US Renewable Generation (MMWh)) Linear (Coal Generation (MMWh))

7
8
North American 

Environmental 

REC Markets

9
Environmental 

Products 

on Nodal

New products are indicated in green.

New vintage expansions are indicated in bold text.

Market Registry Product Futures Vintages Options Vintages

Emissions CITSS California Carbon Allowances 2017-2022 2017-2022

Emissions EPA CAMD Cross-State Air Pollution Rule Allowances (SO2 G1&2, 

NOx Annual, NOx Ozone G2)

2018 2018

Emissions RGGI COATS Regional Greenhouse Gas Initiative Allowances 2017-2021 2017-2021

RECs ERCOT Texas Compliance RECs 2017-2019, 2020-2022 2017-2019, 2020-2022

RECs NEPOOL GIS Connecticut Class I RECs 2017-2023, 2024 2017-2023, 2024

RECs NEPOOL GIS Connecticut Class II RECs 2018-2023

RECs NEPOOL GIS Connecticut Class III RECs 2018-2023

RECs NEPOOL GIS Massachusetts Class I RECs 2017-2023, 2024 2017-2023, 2024

RECs NEPOOL GIS Massachusetts Class II RECs (Non-WTE) 2018-2023

RECs NEPOOL GIS Massachusetts Solar I RECs 2017-2023, 2024 2017-2023, 2024

RECs NEPOOL GIS Massachusetts Solar II RECs 2017-2023, 2024 2017-2023, 2024

RECs NEPOOL GIS NEPOOL Dual Qualified RECs 2017-2023, 2024 2017-2023, 2024

RECs NEPOOL GIS New Hampshire Class I RECs 2018-2023

RECs NEPOOL GIS New Hampshire Class III RECs 2018-2023

RECs NEPOOL GIS Rhode Island New RECs 2018-2023

RECs NEPOOL GIS Maine Class I RECs 2018-2022

Product List (1 of 2)

10
Environmental 

Products 

on Nodal

New products are indicated in green.

New vintage expansions are indicated in bold text.

Product List (2 of 2)

Market Registry Product Futures Vintages Options Vintages

RECs PJM GATS Maryland Tier I RECs (Vintage Specific & Bankable) VS: 2017-2023, 2024; B: 

2019-2023, 2024

VS: 2017-2023, 2024; B: 2019-

2023, 2024

RECs PJM GATS Maryland Solar RECs 2017-2023, 2024 2017-2023, 2024

RECs PJM GATS New Jersey Class I RECs (Vintage Specific & Bankable) VS: 2017-2023, 2024; B: 

2019-2023, 2024

VS: 2017-2023, 2024; B: 2019-

2023, 2024

RECs PJM GATS New Jersey Solar RECs 2017-2024 2017-2024

RECs PJM GATS Pennsylvania Tier I Alternative Energy Certificates 

(Vintage Specific & Bankable)

VS: 2017-2023, 2024; B: 

2019-2023, 2024

VS: 2017-2023, 2024; B: 2019-

2023, 2024

RECs PJM GATS Pennsylvania Solar Alternative Energy Certificates 2017-2023, 2024 2017-2023, 2024

RECs PJM GATS PJM Tri-Qualified RECs 2017-2024 2017-2024

RECs PJM GATS District of Columbia Tier I RECs 2019-2023

RECs PJM GATS District of Columbia Solar RECs 2019-2023

RECs PJM GATS Ohio Non-Solar RECs 2019-2023

RECs PJM GATS Ohio Solar RECs 2019-2023

11
12

Nodal Exchange Environmental Volume & Open Interest

 -

 5,000

 10,000

 15,000

 20,000

 25,000

 30,000

 35,000

 40,000

 45,000

 50,000

 -

 2,000

 4,000

 6,000

 8,000

 10,000

 12,000

 14,000

Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19

 Open Interest Volume
13

 -

 100,000

 200,000

 300,000

 400,000

 500,000

 600,000

 700,000

 800,000

 900,000

 1,000,000

ICE Nodal

Total U.S. Environmental Open Interest
14

1,867,671

485,072

451,080

European Carbon North American Carbon North American Renewable Energy Certificates

Environmental Open Interest in U.S. & E.U.

Source: ICE, EEX & Nodal Exchange – as of 10/31/19

Total Open Interest: 2.8M contracts
15

U.S. Environmental Products 

Product # Firms with Reportable 

level of Open Interest 

Total Reportable 

Open Interest 

Difference from Last 

Week 

CCA V18 42 34,905 125

CCA V19 65 113,368 3,963

CCA V20 46 50,878 2,242

CCA V21 28 30,981 2,278

CCA V22 22 9,536 0

NJ Solar RECs 31 146,093 -300

RGGI V19 32 47,520 -114

PJM Tri-Class 1 RECs 27 104,333 5,673

MA Class 1 RECs 24 20,107 14

CT Class 1 RECs 20 11,556 11,556

MD Solar RECs 23 43,631 135

TOTAL 612,908 25,572 

CFTC COT Report – 10/22/19
Thank You 

Contact Information: 

INCUBEX, Inc.

410 North Michigan Avenue, Suite 910

Chicago, IL 60611

Daniel Scarbrough

President & COO

daniel.scarbrough@theincubex.com

(210) 834-2001