Thoughts on carbon trading?

Question

Been hearing and reading a few things on the carbon emission trading market growing and/or predictions on it booming over the next decades.. is there anyone in trading who currently trades these or is around it to add some color?

D.O.U.G. · Accepted Answer

IF the US (Ex CA and RGGI) replaces the REC market for a fungible EUA product, the market here will explode.  Otherwise you are looking at a NOX/SOX type market which is dead.  Carbon dramatically shuffles the supply stack as much as renewables.  See:  "Duck Curve" in CA.  The real gutsy market right now is SRECs, especially in the Northeast / Midwest.  It is a rules driven "regulatory mandate" market with lots of political risk.

Not embarrased to say I am long about 1.2 million SRECS per year right now and happy given price levels.  A move to a

oil_quant · Answer

Curious as well.  Interested in the market drivers and business model.  Seems quite different from other commodities in that there does not appear to be any sort of "arb" whether across location, grade, or time as the credits appear to be isolated to regional jurisdictions on an annual allocation.  Also curious how spec trading carbon credits might work if it is even possible.  Could be wrong though and happy to learn more.

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Thoughts on carbon trading?

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Thoughts on carbon trading?

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