ION’s Carbon Zero Gaining Ground
ION’s Carbon Zero solution is one of a small number of solutions that are currently available for firms to manage their own CO2 emissions obligations and voluntary sustainability targets, or for those that offer sustainability management and procurement services to third parties. I recently spoke with Asher Brawer, Product Manager for Carbon Zero, to learn more.
Carbon Zero is built on top of ION’s established Aspect CTRM serving 150+ clients across the commodity industry. For Carbon Zero, Aspects’ SaaS-based trade life-cycle coverage was augmented with the business needs for managing and participating in global environmental markets. Certificate management coverage is said to be comprehensive, offering support for voluntary project-based offsets as well as for both government-backed and purely voluntary and generic offsets from any registry. Trade types like futures, options, and swaps enable effective carbon position and exposure management. “The solution empowers businesses to manage trading risk, pricing, carbon project data, registry operations, and other compliance workflows for a comprehensive overview of positions, market exposure, P&L, cashflow, and outstanding offset requirements — all in real-time,” Asher told me.
Currently, Carbon Zero is used by around a dozen customers since its launch last year including smaller traders and hedge funds. It has a couple of competitors in the market, but “Excel remains the biggest competitor for start-up and smaller companies,” Asher said. However, ION sees the carbon and emissions market continuing to grow as regulations will mean that every hydrocarbon player/exporter and corporate will likely need to track carbon exposure, sustainability targets and off-setting credits/allowances. At the same time, Asher also says that he sees the range of carbon reduction projects potentially narrowing as the focus on higher quality off-sets grows. Currently, the solution appeals to both major and smaller traders, as well as funds and companies that run a separate carbon desk.
According to Asher, the Carbon Zero solution allows users to manage sustainability targets and resulting trading and optimizing strategies across the business. It minimizes risk through hedging and monitoring of carbon-related positions and exposures in real-time, calculates offset requirements, manages the lifecycle of the certificates, and leverages a database of over 6,000 carbon offset projects and take positions. In short, it is squarely focused on the carbon-side of trading and managing the trade lifecycle of these instruments. However, as Asher pointed out, it also has advanced features like delivery optimization allowing users to match and optimize inventories and full REPO functionality to support project financing activity. If beneficial for the user, Carbon Zero could expand into renewable fuels providing production forecasts for fuel and sustainability certificates as well. The solution’s workflow aids with business-critical processes and complex calculations, integration via standard APIs, and the ability to monitor, track and report compliance, he told me.
Carbon markets are quite complex and diverse so managing the intricacies of compliance can be somewhat daunting. Over time, as Asher said, the market is likely to grow yet become more standardized in many respects. As more companies are caught in the regulation net, they will need to procure solutions like ION’s Carbon Zero to ensure compliance and optimization. Many will look to supplement their existing installed software with such capabilities and may take the route of bringing in a SaaS solution specifically for the pur
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