Newsletter
The Dec-2022 EU carbon futures contract is now back below the key €80 per tonne level. Carbon is back to where it was two weeks ago. On the face of it that doesn’t sound like much to worry about. But delve deeper and the carbon market might be set
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Carbon markets are just the start of a revolution putting a price on nature. Whether its the deforestation of our rainforests, the leakage of waste plastics into the ocean, or the destruction of the coral reefs by pollution, the damage being done to our natural ecosystem is becoming clearer by
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In a speech last weekend, European Central Bank economist Isabel Schnabel outlined that while the zero carbon energy transition is necessary, it is likely to prove inflationary, and price increases will be far from transitory. Schnabel words were little surprise to many energy and commodity market veterans. Industry analysts have
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This week, one of Germany’s biggest utilities was forced to seek €10bn in financing to avoid a cash crunch in the wake of surging energy costs. The utility company, Uniper is in the fortunate position that its majority shareholder, Finnish power company Fortum, is owned by the Finnish state.
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The price of carbon is ultimately determined by the intersection between the demand and supply of allowances. However, underpinning this is the role that expectations play. Carbon markets - in particular since they are a political construct - ultimately stand or fall on the confidence of market participants in the
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California is not cutting greenhouse gas emissions fast enough to meet its self-imposed 2030 target. In particular, the state faces the trilemma of balancing expanding intermittent renewable energy generation, ensuring adequate energy supplies, and the risk of blackouts as its fragile power grid is buffeted by natural disasters. As long
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At the edge of the carbon market risk curve you will find the voluntary carbon market (VCM). Up until this point I have only discussed carbon markets from the perspective of the formal carbon compliance markets, such as the ones active in Europe and California. Regulated. Legal. Transparent. The rules
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Governments face an impossible trinity if they wish to meet the net zero carbon energy transition - how to balance energy security, affordable energy and environmental sustainability. There have been five energy transitions in the modern age. Each transition involves the transformation of energy sources into economically useful applications as
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EU carbon allowances suffered their worst one day decline on Friday, falling 14% at one point late in the day before rebounding slightly to end the day down 12.7%. So what happened, and where do we go from here? First, it’s worth noting that the carbon price has
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What the non-compliance penalty and a shortage of allowances means for the price of carbon
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The increasing role that options play in the EU carbon market