Volume is Up, but Carbon Trading Markets Still Need to Mature
We feel like we’re on the right track! The global carbon market has generated almost as much money in the first half of this year as it did throughout the whole of 2007, according to Point Carbon. A total of 1.8 Gt CO2e was traded globally in the first half of the year, worth some $59 billion, compared to $63 billion for all of 2007. The aggregate worth of transactions in the first half of 2008 is already a full 94 percent of the value for all transactions in 2007. Here at Belgrave Trust, it reminds us of the early internet, circa 1994- still small, but growing very fast, and still in need of plenty of innovation. However, If we keep growing at this rate, the entrepreneurial forces of capitalism will invent better ways to offset carbon and solve global warming.
But we have a long way to go before we have an efficient GHG market.
Why is the voluntary carbon market still separate from the compliance market? With time, most markets converge. What is important is that green house gases are being reduced in the atmosphere. Still, shouldn’t this be done through the most efficient means? Why is the “retail” voluntary market separate from the “institutional” compliance market? Sophisticated individuals will absolutely demand access to the more advanced market. This is how markets evolve.
Why are there so many certification and retirement standards? As the market matures, the “exchange rate” between these standards will start to emerge. Today the carbon market, like the market for most emerging financial products, is still very opaque. As volume increases, transparency will increase and transaction costs will drop. The result will be a more efficient market, which is necessary to solve global climate change. Markets do this naturally, but in this case our climate is running out of time.
Where is the focus on High net worth individuals? As markets mature they always make room for high net worth individuals, but so far the Carbon Markets seem to only focus on the low end individual or the institution. This makes little sense when you consider the globe’s 10 million or so high net worth individuals consumption ultimately account for the bulk of the Earth’s carbon footprint.
Any Climate change solution must engage high net worth individuals.
The Return of the Commercial Sailboat
Soon cruise passengers might be doing double takes as cargo ships begin to resemble Pirates of the Carribean. Cleantechnica reports:
As oil prices soar, tall wind-powered ships are looking like an increasingly viable alternative.
The first commercial cargo of French wine to be transported by sailboat in the modern era is due to arrive in Dublin this week after a six-day trip. The 108 year-old British boat, chartered by French shipping company Compagnie de Transport Maritime a la Voile (CMTV), is carrying 30,000 bottles of wine.
Though the ship travels at a top speed of eight knots, half the speed of a modern cargo vessel, it is completely pollution-free. The 50,000 other merchant ships traveling the world emit 800 million tons of carbon dioxide each year.
Joking aside, the trade-off doesn’t seem too steep. CO2 output from shipping is twice that of aviation, and BP estimates that the global fleet of 70,000 ships burns through 200 million tonnes of fuel a year. Even a small change in the percentage of fuel-powered cargo ships could have a significant effect on CO2 emissions.
