Gordon Bennett
Managing Director, Utility Markets, Intercontinental Exchange (ICE)
Britain’s world-leading energy futures markets – anchored by Intercontinental Exchange (ICE) in London – are critical enablers of the energy transition, providing the risk management, price discovery, and capital allocation tools needed to reconcile the physical laws of energy with the unpredictability of human behaviour.
“Imagine how difficult physics would be if electrons had feelings?” This fundamental question, asked by Nobel Prize winner Richard Feynman, highlights the unavoidable difference between the “hard” and social sciences. In physics, the laws are immutable, objective, and predictable. The terrain is constant and affords precise testing
In economics, the terrain is ever-changing. Because economics is about reconciling the complex interplay of human behaviour, the “solution” to explaining and predicting the future is inherently unstable. That is why rational economists make vastly different choices when deciding how best to allocate scarce resources.
This paradox lies at the heart of the energy transition. Electrons flow, molecules combust – energy systems must obey the laws of physics, not opinion polls.
The markets that allocate capital into that system are built by, and for, people – who have feelings, shaped by emotion and perceived value.
Britain’s Strategic Advantage in Global Energy Markets
This is why markets matter. Here, Britain has a strategic asset: a globally leading set of energy and environmental futures markets provided by ICE and risk-manged in London.
Energy markets function not only as mechanisms for buying and selling commodities – they are tools for transferring risk and discovering price.
In a world of uncertainty, they act as insurance mechanisms. Producers, consumers, and investors can hedge against volatility, ensuring capital is deployed efficiently into energy infrastructure, production, and innovation.
ICE’s markets – spanning Brent crude, Title Transfer Facility (TTF) natural gas, electricity, carbon allowances, and renewable energy certificates – serve as global benchmarks – facilitating a rise in risk managers (think of them as a type of insurance agent) who can match the diverging needs of producers and consumers.
These markets are not only vital to global energy security – they sit at the top of the global hierarchy of value and trust.
These are not hypothetical models.
ICE’s futures markets are observable, verifiable prices, shaped by the real-time decisions of thousands of participants. When a price is quoted on ICE, the market is speaking—aggregating global information into a single, trusted signal.
A Game of High Stakes?
This is the “wisdom of the crowd” in action. It’s like a global game of The Price is Right. Contestants – whether traders, utilities, or investors – compete to discover the true value of risk and reward. As Leslie Crowther would say: “Come on down!” The difference is, this is no game, the stakes involve billions of pounds and dollars, from windfarms to LNG terminals, shaping capital flows in critical infrastructure from Aberdeen to Abu Dhabi.
If we choose markets as the mechanism to allocate resources, then price volatility is the language of scarcity and surplus. It’s not a bug, it’s the signal. Prices reflect not just fundamentals, but headlines, geopolitics, and emotion.
Futures markets act as insurance – proxy insurance. Futures contracts allow companies to hedge exposures without matching every detail of physical supply. And in dynamic energy markets, liquidity beats precision.
What matters is the ability to act – quickly, at scale, and with confidence. In an uncertain world, the ability to change your mind is a fundamental tenet of modern-day risk management.
This advantage is not guaranteed. At a time when the global energy transition requires trillions in new investment, the UK must continue to lead the game.
Britain’s leadership as a financial steward amplifies this. Post-Russia’s invasion of Ukraine, the UK resisted interfering with ICE’s gas price signals, in contrast to the EU’s price correction mechanism, preserving the crowd’s wisdom to signal scarcity and spur LNG terminal investments.
Price spikes, while painful, send critical signals to consumers and suppliers. Trusting the market to rebalance proved the UK’s commitment to long-term reliability over short-term optics.
The UK’s Global Credibility at Risk
Conversely, the UK’s 2013 Carbon Price Support mechanism bolstered weak post-financial crisis carbon prices, reinforcing low-carbon incentives.
These moves showcase Britain’s knack for balancing market integrity with strategic intervention, reflecting a sophisticated, principles-based approach: intervene only to strengthen market function – not to override it.
This underpins the UK’s credibility as a home for world-class financial, energy and environmental markets.
Following April 2025’s bout of policy-induced volatility, the legendary investor Howard Marks reminded his investors that: “Nobody knows. Yet again”.
Just like prior episodes of uncertainty, it is impossible to know what the future holds. In the context of the energy transition, policymakers should take heed of this frame.
Thankfully, molecules and electrons do not have feelings. Backing Britain means recognising that the efficient functioning of markets is the best way to reconcile the immutable laws of physics with the unpredictable nature of human behaviour. Futures markets allow businesses to hedge, investors to model returns, and infrastructure to be financed.
In other words, this is economic progress that places the UK at the centre of the world’s energy supply chain. It’s not just a financial asset – it’s an enabler of our energy future.
Featured image via Westlight / Shutterstock.
