Soaring temperatures leads to 60% increase in carbon-emissions credits
As temperatures soar across Europe, many hedge funds are watching the mercury with bated breath.
Over the past 3 months carbon emissions credits have soared by 60% in the European Market.
Utilities and others can use the credits, which are required to be owned in order to burn fossil fuels in their power plants or sell to other manufacturers.
Rising prices have grabbed the attention of hedge funds looking to profit by holding the credits before passing them along to an end user.
Those who have been increasing their holdings include Goldman Sachs, Morgan Stanley, Autonomy Capital and Northlander Commodities Advisors.
Northlander, a UK firm, have been one of the biggest winners. It’s reported that they have made as much as $125m for investors on climate bets.
Why are credits rising in price?
Over the past 3 years, the credits are up 350% in total.
Some are citing soaring temperatures as the catalyst for price increases. Others are looking at a move by the EU in 2017 to cut back the number of emissions credits handed out. Prices, which had been steady for years, soon after began to rise.
Reputation
Many believe that profiting from such an issue could result in scrutiny and controversy. With the increase in popularity of ESG investing, making money from soaring temperatures that killed 400 in the Netherlands during a one-week spell will not sit well with some people. Not to mention the obvious links with global warming.
Many believe that profiting from such an issue could result in scrutiny and controversy. With the increase in popularity of ESG investing, making money from soaring temperatures that killed 400 in the Netherlands during a one-week spell will not sit well with some people. Not to mention the obvious links with global warming.
A 2016 MIT study found; EU emission-credit trading system has resulted in a significant reduction in greenhouse gases.
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