Markit’s CER Success Rate indices measure how CER projects are performing compared to the targets stated in their Project Design Document, the key document involved in the validation and registration of Clean Development Mechanism (CDM) projects. The Markit CER Success Rate indices are designed to help investors track the success rate of CDM projects and provide guidance on future success of projects. The indices will also be used by institutions financing CDM projects for valuation, risk management and research purposes.

The new family of indices shows the extent to which a particular project, type of project, sector or region is successful and measures up to the expectations expressed in the relevant project documentation. The Success Rate is expressed as the ratio of realised CERs to the planned target amount of CERs.

The indices are split by geographical location and sector of activity based on a classification scheme developed by Markit. They will be calculated monthly by Markit using information on CER issuance and individual registered projects that are listed on the United Nations Framework Convention on Climate Change (UNFCCC) website. The index levels will consist of a comparison between actual and projected success of CER projects over a 24 month rolling period.

Niall Cameron, Executive Vice President of Commodities, Indices, Equities and Risk Management at Markit, said: “There is a lot of information out there on the performance of CER projects but it tends to be hard to piece together and track. The beauty of the Markit CER Success Rate indices is that they pull all this information together, standardise and analyse it. We believe these indices represent a big step forward for the CER markets and we have had encouraging feedback from market participants.”

Laurent Segalen, Managing Director, Commodities and Environment at Nomura, said: “Nomura is proud to have assisted Markit in the creation of this truly innovative index family. These indices will provide transparency on CER project success rates and, for the first time, enable carbon investors to hedge delivery risks within their portfolio.”

Jonathan Young, Carbon Credit Underwriter at Munich Re, said: “As an underwriter of CDM projects, I welcome the launch of these new indices, as I believe that they will help establish recognised standards and become a valuable risk management tool.”