Iwas wondering if anyone out there is in the business of carbon emissions trading. I find it fascinating given that it is expected to grow into a trillion $ market in the next 10 years. Who can one learn more about CET? Have commodities firms (Glen, Traf, Vitol etc) set up departments for this?
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The most active buyers of emission rights are power companies, the aluminium industry, the steel industry, paper industry and the cement industry. Some of these firms have their own trading unit in charge of purchasing and forecasting future carbon prices, while other firms outsource such task.
There are also many prop-trading firms and market makers within this sector; some a legit, but there are also quite a lot of boiler rooms and plaid fraudulent schemes to obtain CER credits so watch out where you apply.
Dont be too quick in thinking the carbon market is the next big thing; its a "fictional" market, in the sense that an entity controls and publishes the supply of allowances (the european comission in the case of the EU ETS). In the case of the european trading scheme, which is the largest carbon market in the world, the european commission put too much supply in the market, therefore crashing carbon prices. Now there are even some rumors that the EU ETS was a complete failure, as a ton of carbon emission is now priced at less than 5 euros.
Check out this article:
http://www.euractiv.com/climate-environment/meps-vote-carbon-market-fut…
We talking North America here?
it's evolving and getting better, look at the Cali auctions for CCA's, they priced fair and learned from the EU. Plenty of room to grow.
I automatically thought we where talking about the EU scheme as its the largest in the world (around 75bn euros traded per year)
How did cali deal with the issue of oversupply of carbon emission ? Do they adjust supply according to some maco indicators like gdp growth ? would be nice to have more info on this
Don't remember the granularity but they collected sufficient historical data over the years for the carbon emitters and businesses to gauge an indicator of where the volume would be. They then regressed many models against it and definitely reduced the oversupply weakness of the EU scheme. They also added some creativity in dealing with other issues that was evidenced and so far its doing decent (despite the law suit issue that came a week or two before the first auction, it hurt the price but had a gradual rebound). There are already other interested states and even some provinces that are gaining interest to also adopt, i think it was 5 out of the 11 listed members or something.
You are about 7 years late to the party. My first job tried to send me to our carbon group. I declined and group was gone within a year. At the time, barcap had best desk in the market
Trading Carbon? (Originally Posted: 03/03/2009)
Is carbon the next big asset class?
Should a young person in a BB try to move towards this in the next 1-2 years - and if so, any ideas how?
Feel you it ain't for me either. But it does exist the deals usually take a LONG time to get done but the margins are very high. No standardized contracts, one-off legal wars, ill-liquid hold and pray type deals.
Similar to BD power guys and products folks I would say. There is little "trading" to be done.
Check out http://www.chicagoclimatex.com. Brand new carbon futures exchange.
While prices for credits have fallen recently, and Phase 1 of EU ETS was a bust (too many credits given out, price plummeted to ~0), the market still looks like it will be growing (how high/fast is another question, though) into the future.
Since the future of the mkt in the US isn't totally clear, there would still be some risk associated with jumping in now. As far as I know, the vast majority of the mkt is based in London still, so I suppose that would be a factor to consider if you were really interested in the space.
A good recent article to have a look at is http://www.ft.com/cms/s/0/19c7c222-02a8-11de-b58b-000077b07658.html . It lays out the market and its future pretty well.
The FT I think also had a video from the head of the european climate exchange recently on the topic that you may want to look for.
Carbon Trading - Which firms trade credits? (Originally Posted: 12/07/2009)
Besides Barclays and Deutsche, which firms trade carbon credits?
I'm assuming it's all run out of Europe, but I honestly don't know much about it. The only reason I know Barclays does it is because I remember some environmental protesters being, well, unemployed toolbags outside their offices in London a couple of months ago.
Aside from that. what do you guys think the future of emissions trading looks like? Any chance the Copenhagen summit is going to put out any meaningful legislation or kick-start carbon trading in the US/Asia?
It's like a golden dream that never will happen. JP also does it.
Or haven't you been keeping up with Climategate? The carbon market goes zero bid in the next ten years.
There was an article in alphaville the other day that Knight is opening a carbon trading operation in London, and I think they'll be looking to hire some guys.
Copenhagen isn't going to do shit
Man-made commodities...lol
Carbon Trading - Started doing research (Originally Posted: 06/09/2011)
Has anyone here started trading carbon credits yet? I started doing some research a few weeks ago, but theres is VERY LITTLE info to go around.. How does it work?
Thanks for your help!
most of the banks do and a few choice firms in the NE
I was on the website for the Montreal Carbon exchange looking at End-Of-Day data, and there's never any change and no volume either (ZERO volume)!
So illiquid it's crazy! How does the trading work? Is it like options? Futures? Theres no books, nothing on trading CC's!...
If you know of any place where i can get more information, please let me know!
My firm trades them as apart of the overall environmental products area. There is no real standard contracts yet and were a long way from exchanges.
They are mostly traded in Bluenext and ICE, http://www.bluenext.eu/ ; https://www.theice.com/productguide/ProductGroupHierarchy.shtml?groupDe….
A little more info, most important contract would be european emision allowance EUA, followed by the certified emission reductions CER scheme from the UN that can be used in europe to offset emissions (demand). The other kind of certificates are mostly certified/noncertified voluntary reductions, that usually trade at very low values. There are extra things in the CER scheme, like gold standard things, but thats not priced as far as I know.
OP, is there a reason you seek this data?
China to Trade Carbon Emissions by 2018 (Originally Posted: 06/04/2014)
If you have never heard of cap and trade, it is a market based approach of controlling our emission of greenhouse gases and slowing climate change. In a cap and trade market, companies buy "permits" that allow them to emit a certain amount of carbon emissions, and the market exists for companies to buy and sell permits depending on how much greenhouse gas they produce. Currently, the European Union has the largest cap and trade market in the world, but China, the world's fastest growing economy and also the largest emitter of greenhouse gases, is aiming to implement a national cap and trade market by 2018.
This could be start of significant changes in how we mitigate climate change:
With more than 60 carbon markets active or soon to be active around the world, including ones in France, Mexico, Australia, and California, global adoption of the cap and trade market is definitely a strong possibility.Do you see a viable future for a global carbon market? What are some of the consequences of a worldwide market such as this?
And why China has announced a national carbon market
I'm dubious of this type of system. Like anything else there has to be one global system with a set amount outstanding all over the world. Good luck tracking and enforcing that one. Moreover, if you don't you'll end up with carbon arbitrage where i'll simply set up shop somewhere that doesn't give two licks (e.g Africa) and then emit all I need there. Also, how do you gauge how much I 'emit'. I mean how far down the production chain does this go? Oil companies produce emissions to extract, shippers produce emissions to get that energy somewhere, a power plant burns it to produce electricity, which then power a manufacturing facility which produces emissions, then they sell crap to a store that emits emissions, you get my point. Do they all get crushed by this? Or can i be the guy who sits there and sells manufactured stuff while planting trees to offset 'myself' while my 10 dollar toy used a ton of emissions to be produced.
Great in theory, awful in practice. Another power grab. Governments should spend more time worrying about their own financial houses rather than trying to create fictional, global systems that have 0 chance of being enforced.
I agree it seems really hard to track. I interned with a start-up that was consulting and selling energy conservation solutions - and in turn, if the company could prove in the energy market that energy was saved, it could sell that saved energy back to the producer as if they themselves produced it. There's just a whole lot of foul play that can occur...
I don't get, how we have a global market, if those markets are national.
Otherwise, I think, this is good news. But I don't buy it yet. First we'll have to see how strict those rules are going to be.
I can only talk with experience from Germany. Here, some companies are excluded and don't have to mind how much carbon dioxide they pump into the air. Others find gaps to fullfil the requirements. Still, this is a topic in the company I did an internship and they are working on makeing their production more efficient in terms of co2 production. So I guess, eventhough this is not the perfect solution, it still has impact.
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