Pricing and New Developments in Global Carbon Markets
Navigating the dynamic interplay of policy, market mechanisms, and renewable energy in shaping the future of global carbon markets.
From the European Union Allowances (EUAs) to the Western Climate Initiative's Carbon Allowances (WCAs), this article aims to dissect these trends, offering insights into their implications for stakeholders across the spectrum.
EUAs: Riding the Renewable Wave and New Market Instruments
The EUA spot prices experienced a robust surge of 5.59% over the last week, settling at €57.18, reflecting the ongoing correlation with fluctuating gas prices. However, the notable increase in Germany's renewable energy output in 2023, which led to a reduction of 250 MTCO2e, presented a downward pressure on EUA prices, highlighting the intricate balance between renewable energy adoption and carbon market performance.
In a strategic move to broaden market access, ICE Endex introduced EUA Mini Futures Contracts, targeting smaller emitters and retail investors. This innovation comes amid tightening supply forecasts towards 2030, aimed at making carbon trading more inclusive and reflective of the diverse market participants' needs.
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