Pricing Dashboard
What is Carbon Pricing?
Carbon pricing is the practice of putting a price on greenhouse gas emissions to incentivize individuals, companies, and governments to reduce their emissions.
It is based on the principle that if there is a cost associated with emitting greenhouse gases, individuals and organizations will be more likely to find ways to reduce their emissions and transition to cleaner alternatives.
How is Carbon Priced?
There are two main types of carbon pricing mechanisms: carbon taxes and cap-and-trade systems. A carbon tax is a fee levied on each unit of carbon dioxide or other greenhouse gas emissions produced by individuals, companies, or governments. Cap-and-trade systems, on the other hand, involve setting a limit or "cap" on the amount of emissions that can be produced within a certain jurisdiction, and allowing companies to buy and sell emissions allowances within that cap.
What is a Carbon Credit?
A carbon credit is a tradable certificate or permit that represents the right to emit one metric ton of carbon dioxide or its equivalent, and it is used in carbon offset programs to help offset greenhouse gas emissions by supporting projects that reduce emissions or remove carbon from the atmosphere.
European Union (EU)
What is the EU ETS?
The EU ETS, or the European Union Emissions Trading System, is a market-based mechanism aimed at reducing greenhouse gas emissions in Europe. The system was established in 2005 as part of the EU's efforts to combat climate change and meet its commitments under the Kyoto Protocol.
What are EUA Futures?
EUA futures are a type of financial derivative that allows investors to speculate on the future price of European Union Allowances (EUAs), the permits used in the EU Emissions Trading System (ETS).
Why trade EUA Futures
One of the main reasons investors trade EUA futures is to hedge against the risk of price volatility in the EU ETS. Companies that are subject to the ETS may use EUA futures to lock in a future price for the permits they need to comply with their emissions limits. Investors can also use EUA futures to speculate on the direction of EUA prices and to profit from changes in the market.
What Influences EUA Futures?
The price of EUA futures is influenced by a range of factors, including the supply and demand for EUAs, the level of emissions covered by the ETS, and government policies that affect the carbon market. For example, a decision by the EU to tighten the cap on emissions covered by the ETS would likely increase demand for EUAs and drive up their price.
California Carbon Market
California Carbon Allowance Vintage-Specific 2022 Futures
What is the California Cap-And-Trade Program?
The California Cap-and-Trade Program is a state-level initiative designed to address climate change by setting a cap on greenhouse gas (GHG) emissions from certain sectors of the economy, including power generation, industrial facilities, and transportation.
What are California Carbon Allowance Futures?
California Carbon Allowance (CCA) Futures are financial contracts traded on the Intercontinental Exchange (ICE) Futures platform that allow participants to buy and sell allowances for future delivery. These futures contracts represent the right to emit one metric ton of carbon dioxide or its equivalent greenhouse gas (GHG) emissions, which can be used by regulated entities to comply with the California Cap-and-Trade Program.
Why Trade CCA Futures?
Regulated entities can use CCA Futures to manage their compliance costs under the California Cap-and-Trade Program. Through the program, trading CCA Futures enables market participants to manage their risk exposure to the carbon market. Investors and traders can also use CCA Futures to speculate on the future price of carbon allowances. Futures markets provide a transparent and liquid marketplace for the trading of allowances, which facilitates efficient price discovery and promotes the flow of capital to low-carbon investments.
What Influences CCA Futures?
Several factors can influence the price of California Carbon Allowance (CCA) Futures, including changes in policy, supply and demand dynamics, and macroeconomic trends. Changes in climate policy, such as the implementation of more ambitious emissions reduction targets, can create demand for additional carbon allowances, which can drive up the price of CCA Futures.
