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Tariq Siddiqui's picture
COO Upstream EP Advisors LLC

Oil & Energy | Business Development | Capital Projects | Offshore Wind -  Proven leader in offshore development and operations, with 25+ years’ expertise in managing business through cycles...

  • Member since 2021
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  • Sep 7, 2021 10:38 am GMT
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Carbon emissions are quickly turning into a commodity. All major commodity traders are ramping up their carbon trading desks As per the WSJ report, it is not too far-fetched to speculate that at some point in the more distant future, carbon emissions could even experience a shortage.

WHATS HAPPENING IN CARBON MARKETS ??

  1. Several groups of asset managers calling for a global price on carbon emissions to achieve net-zero initiative
  2. Emissions trading is becoming big business and commodity traders are turning to carbon trading.
  3. Shell and BP are also among the largest energy commodity traders in the world—with sizeable carbon-trading business divisions (focused on EU). 
  4. The EU ETS is well established and now China has its own emissions trading market, international market is likely to grow by $22 trillion by 2050
  5. The regional markets are also growing; example California with a size of $280 billion
  6. Carbon emissions, currently trading at around $60/ton on the ETS, which is already a record high, need to rise to $147 per ton to make net-zero targets achievable.
  7. The carbon market could exceed the oil market in size by 2030 and even by 2025 if regulations come fast enough and are tough enough. 
  8. The price of carbon is likely to rise further, especially this winter, when short supplies of natural gas may make Europe more reliant on coal-fired power generation, meaning the companies operating the coal power plants would need to buy more emission permits.

BOTTOMLINE - CARBON MARKETS ULTIMATE NET-ZERO DRIVER

Over the longer term, however, the soaring price of permits to release carbon dioxide should help companies invest more in low-carbon technologies to reduce their footprint. And this is how net-zero will be achieved, according to those that see the carbon market as perhaps the ultimate net-zero driver.

 

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