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IHS Markit launches index to track carbon credits

IHS Markit Ltd. launched its first index to track the price of carbon credits across global markets.

The company said its IHS Markit Global Carbon Index will track the performance of the European Union Emission Trading System, the California Cap-and-Trade Program and the Regional Greenhouse Gas Initiative. IHS Markit said the index will be calculated using data from OPIS, the company's energy price reporting division, and carbon credit futures in the three given markets.

The total return potentially gained by investors in carbon credit trading since the start of 2018 is at 132%, according to the index. IHS Markit also noted 57 countries have implemented carbon pricing mechanisms, a 34% increase from 2017.

International conventions such as the Kyoto Protocol and the Paris Agreement set carbon emission targets for countries who are signatories of the agreements. Article 6 of the Paris Agreement outlined how countries can cooperate to mitigate greenhouse gas emissions and a framework that involves "the use of internationally transferred mitigation outcomes towards nationally determined contributions."