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A Unique Edge in Hedging

Emissions trading strategiesBecause we grew our emissions business out of consultancy – advising governments and corporates on their emissions strategies – we can offer you a range of support and help you answer the three key questions to managing your position:

  • When do I trade?
  • How much volume do I trade?
  • What tools do I use?

This will depend on your type of business, the variability of your emissions and whether you have any significant indirect exposures to the cost of carbon. Common approaches are to lock in a known and budgeted ‘shadow’ carbon price at the start of the year, to buy or sell regularly in line with emissions, to track an average price for the year (strategic hedging) or to time your moves in the market to achieve the best prices either by following a set of rules or reacting to developments (tactical hedging). Additionally many companies can use their allocation for straightforward financing at much better rates than the debt markets.

CO2 price volatility: why hedging matters

YTD ICE Dec 14 Futures

Extremely high volatility surrounding the implementation of backloading and high volume sell-offs of Phase 2 offsets have already been seen this year, driving up costs for participants with short EUA positions.

We recognise most ETS companies just want to maintain a neutral position and minimise their exposure to a volatile and artificial market. There are many ways to achieve this but doing nothing is certainly not one.

Take a look at some of the basic tools we can offer you to meet your compliance obligations.


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