Carbon Trading is a booming business.
The New York Times is reporting In London’s Financial World, Carbon Trading Is the New Big Thing.
“Carbon will be the world’s biggest commodity market, and it could become the world’s biggest market over all,” said Mr. Redshaw, the head of environmental markets at Barclays Capital.
If greed is suddenly good for the environment, then the seedbed for this financial experiment may be London. More carbon was traded here than in any other city, according to a study by International Financial Services London, a company promoting British-based financial business.
Carbon could become “one of the fasting-growing markets ever, with volumes comparable to credit derivatives inside of a decade,” said Chris Leeds, 38, who is the head of emissions trading at Merrill Lynch here and who plans to expand his team to five traders from two by the end of the year.
Carbon Planet has just joined the Chicago Climate Exchange, hooray, so we are able to trade all manner of carbon credits as a tier 1 brokerage. There are dozens of emerging climate exchanges at the moment, and a variety of registries that record who has what credits. Some of these registries charge a lot of money to transfer ownership of credits, making them useless for Carbon Planet’s direct to customer retail operation. But there are emerging registries that operate in an almost friction-less manner. The next step is to develop a common registry API, baseline feature set and inter-registry transfer protocol such that traders and exchanges can automatically move carbon credits between each other more easily.
The range of carbon products, and the various prices of those products, have been the subject of a lot of criticism recently. The European over-allocation of credits caused some initial price instability, and the veracity of many credit creation schemes has been put under scrutiny. Standards like the WWF’s ‘Gold Standard’ have had early success in defining what a good carbon credit should be, but exclude all forestry projects. CDM projects can only be created in some parts of the world, NGACs can only be created in New South Wales, Australia. There is a vast eco-system of carbon and derived products coalescing right now and a key Carbon Planet aim is to demystify a lot of it, select only the highest quality credits for our own carbon pool and still be able to source any kind of carbon products based on customer needs. — DS
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