- Sep 4, 2021 3:40 pm GMT
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 ??
- Several groups of asset managers calling for a global price on carbon emissions to achieve net-zero initiative
- Emissions trading is becoming big business and commodity traders are turning to carbon trading.
- Shell and BP are also among the largest energy commodity traders in the world—with sizeable carbon-trading business divisions (focused on EU).
- 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
- The regional markets are also growing; example California with a size of $280 billion
- 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.
- 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.
- 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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