Newsletter
Up until recently, an investor wishing to gain exposure to the EU carbon market had to invest in an exchange traded futures product. That changed in November last year when the first physical carbon allowance investment product launched. Unlike futures based products, investing in the physical allowance is not without
Newsletter
"There are no taboos in this situation" EU ETS emissions are estimated to have increased by 8.7% in 2021, according to a recent poll of analysts by Refinitiv. Exceptionally high natural gas prices resulted in generators switching to thermal coal, significantly increasing the carbon intensity of power
Newsletter
“If everyone is thinking the same thing, someone is not thinking.” - General George Patton, U.S. Army Futures markets are not simply full of speculators trying to anticipate what other speculators are going to do, although it might feel like that sometimes. Commodity futures markets involve a vast array
Newsletter
Carbon prices on the Regional Greenhouse Gas Initiative (RGGI) fell by almost 10% yesterday after a report released by Virginia Governor Glenn Youngkin criticised the emissions trading scheme for being ineffective and forcing consumers to pay more for their electricity. However, what appears to have unnerved the market and led
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Hedging by utilities is one of the principle drivers of carbon allowance demand, and in turn carbon market price discovery. Utilities are one of the most active participants in the EUA spot and futures markets, balancing both their current and expected future carbon risk. However, over the next few years
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Every so often its worth stepping back and checking in on the prevailing sentiment underpinning an asset class. Carbon markets are no different, especially now that there is greater degree of retail investor participation. There are a few ways of looking at this: Google search interest for related terms, whether
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Central to the decarbonisation of many sectors under the EU ETS is the widespread rollout of green hydrogen as an industrial feedstock. Up until very recently estimates have suggested that Europe requires very high carbon prices to incentivise the switch away from hydrogen manufactured using fossil fuels, known as grey
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UK carbon prices have not suffered the same sharp declines as the EU
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The voluntary carbon market has borrowed a concept from the gold mining sector known as ‘streaming’. Companies that are active in the nascent carbon streaming industry suggest that they offer investors a way to get exposure to the underlying value of carbon credits, while also reducing the carbon credit generation
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The primary market for issuing EU emission allowances (EUAs) is via auction. The results of an individual auction is often interpreted by carbon market participants as being bullish or bearish for the carbon futures market - often erroneously. So, what do the auctions involve, and how should we interpret them?
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Compliance carbon markets typically go through a number of distinct phases in their development. Each phase sets the stage for the evolution of subsequent phases. There is a sweet spot in the development of an individual carbon market where the strength of policy support is such that the market has
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Which industries are most exposed to high natural gas prices?