Newsletter
One of the pillars of the European carbon bull market during 2021/22 was that emission allowances (EUAs) would become more and more scarce. The thesis was pretty simple. The Market Stability Reserve (MSR) acts to cut the TNAC by 24% per annum, reducing the free float available for obligated
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Reflections on the carbon market liquidation
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Carbon markets will gradually evolve to a state in which liabilities, and not fundamentals drive prices. To see how this could evolve you only need to look at the growth in investment products seeking to manage a specific liability for investors - whether that is retirement, risk management, ESG criteria,
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Every ships captain will know that a sudden change in wind direction can be enough to cause their vessel to crash into the rocks. The options market can also result in rapid, changeable and powerful gusts of a different kind, creating havoc in financial markets.
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“You may not be interested in war, but war is interested in you.” ―Leon Trotsky The horrors of war are a tragedy for the innocent, caught up in the crossfire. Nevertheless, as investors it is important to consider what the potential fallout from the crisis is for the EU carbon
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As fears grow that economic activity could slow sharply in the face of inflationary pressures, its natural to ask what impact a recession will have on the world’s largest carbon market. There have been three notable economic events during the history of the EU ETS: The Great Financial Crisis
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Investment institutions and asset allocators are under pressure to align their portfolios with net-zero targets. In addition to security selection and the use of carbon allowances and credits, a third way to reach net-zero targets has been gaining attention - short selling carbon intensive stocks. In a submission document to
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Probably best not to invest in a fund that doesn't know the difference
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Why mandatory climate disclosure requirements could drive demand for emission allowances
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“When the well is dry, we know the worth of water.” ―Benjamin Franklin California’s emissions trading scheme (ETS) accounts for roughly 85% of all emissions in the state and covers large electric power plants including power imports, large industrial plants, and natural gas and petroleum distributors. One of the
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What proposed changes to Article 29a mean for EU carbon prices
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Carbon price near levels where gamma hedging begins