Financial markets have typically worked on the assumption that climate policy would be gradually tightened over a period of several years, if not decades. This is known as the “slow policy ramp”. Too high a carbon price at the outset for example, many reason, will be politically untenable. Instead the…

The lumpy, unpredictable nature of climate change and the transition towards zero carbon is likely to mean that inflation will be higher, and more volatile in the future. Much of this inflationary pressure relates to the impact that climate shocks have on the supply of essential commodities, especially agricultural and…

What lessons can we learn from the first cap-and-trade system? The EU’s carbon market was not the worlds first cap-and-trade system to tackle a serious environmental problem. That honour goes to the United States sulphur dioxide (SO2) allowance trading system. Flue gas emissions from coal-fired power generation released huge quantities of sulphur dioxide (SO2) and nitrogen oxides (NOx) emissions high…

“Stranded assets” are those left unexploited or experience a decline in value due to changing in market conditions and regulations adopted to decarbonise the economy. The energy supply and generation business is particularly familiar with the concept of stranded assets. The total embedded emissions of known fossil fuel reserves is…

As the price of carbon rises it will increasingly imbed itself in the economy, becoming an important driver of costs for business, and ultimately prices for consumers. The economy (including all the products and services we consume) currently holds a massive uncovered short position on carbon. …

All commodity markets are political, you just need to understand the game that’s being played. Whether it is oil, sugar or rice or something else, government intervention isn’t too far away. Environmental markets such as carbon are a particular type of political construction in which artificial scarcity is created through…

Carbon markets are just the start of a revolution putting a price on nature. Whether its the deforestation of our rainforests, the leakage of waste plastics into the ocean, or the destruction of the coral reefs by pollution, the damage being done to our natural ecosystem is becoming clearer by…

The vast majority of 1.5°C-aligned scenarios require at least some carbon removal. For example, the 2018 IPCC 1.5°C report states that “all pathways that limit global warming to 1.5°C with limited or no overshoot project the use of carbon dioxide removal.” The IPCC report estimates that the world will need…

The US like many jurisdictions across the globe are in the process of tightening up the rules around what climate related information companies should make public. Many companies are releasing data on a voluntary basis, but it can be difficult to compare one firms data to another. Standardised data on…