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Academy

Compliance carbon markets are fascinating creations at the intersection of environmental science, economics, finance, game theory, and politics. We'll walk you through them in small set pieces so you learn all the secrets !

Foundations

1. What is Carbon Pricing?

1. What is Carbon Pricing?

A policy mechanism that places a cost on carbon emissions to incentivize individuals and businesses to reduce their greenhouse gas emissions.

3 min
2. Cap and Trade systems

2. Cap and Trade systems

Trading system where a government sets a cap on the total allowable CO2 emissions and allows businesses to trade emission allowances, encouraging emissions reductions.

3 min
3. The EU Cap and Trade

3. The EU Cap and Trade

Created in 2005, the oldest and largest Cap and Trade system worlwide.

2 min
4. Sectors under the EU ETS

4. Sectors under the EU ETS

The EU ETS covers emissions from the energy, manufacturing and aircraft sectors.

2 min
5. The Cap

5. The Cap

The limit set on the total amount of greenhouse gas emissions that can be produced by entities covered by the EU ETS.

3 min
6. Price evolution over time

6. Price evolution over time

EUA prices have been steadily increasing after the introduction of market stabilizing mechanisms.

3 min

Evolution

7. The EU ETS phases

7. The EU ETS phases

The EU ETS is organized in phases since its creation in 2005. It is not it its fourth phase.

3 min
8. The Legislative Frameworks

8. The Legislative Frameworks

The EU ETS is rooted in a legislative framework dating back to the early 1990s.

2 min
9. The price drivers

9. The price drivers

Multiple factors such as the weather, energy prices, or industrial activity can affect EUA prices.

2 min

Trading

10. The Commitment of Traders report

10. The Commitment of Traders report

The Commitment of Traders report shows weekly data on market participant's positioning.

3 min
11. Coal-to-gas differentials

11. Coal-to-gas differentials

We often see terms like “coal-to-gas” differentials and “fuel switching” when discussing EUA price movements. While these may sound complex, they're not as complicated as they seem.

3 min
12. What is a short squeeze?

12. What is a short squeeze?

During a short squeeze, the price of an asset rises, because there is a lot of demand from many traders at the same time.

3 min

The Carbon Allowance Tale

The Age of Carbon

Carbon Markets: Definitions

The Age of Carbon

Fueled by the success of the European Emissions Trading Schemes, jurisdictions around the world are implementing compliance carbon markets to reduce emissions

May 1, 2024
The EU ETS: Simple Concepts of Emissions Trading Schemes

Carbon Markets: Definitions

The EU ETS: Simple Concepts of Emissions Trading Schemes

The EU ETS is a market-based instrument imposing a price on carbon emissions. It functioning through a "cap and trade" approach to drive emissions reduction.

May 1, 2024
EU ETS definitions: updated guide for 2024

Carbon Markets: Definitions

EU ETS definitions: updated guide for 2024

The EU ETS is the primary tool in the EU's fight against climate change, utilizing a cap-and-trade system to regulate and diminish greenhouse gas emissions across diverse sectors. 2024 presents a potential shifts in carbon price dynamics following a flat 2023.

May 1, 2024
What are the greenhouse gas emissions trading schemes in the EU and globally?

Carbon Markets: Definitions

What are the greenhouse gas emissions trading schemes in the EU and globally?

The proven efficacy of the EU ETS, as well as the incentive brought up by the CBAM are prompting more and more legislatures to adopt greenhouse gas emissions trading schemes across the world.

May 1, 2024
What is the difference between carbon taxes and emissions trading schemes?

Carbon Markets: Definitions

What is the difference between carbon taxes and emissions trading schemes?

Carbon taxes and emissions trading schemes (ETS) are two distinct carbon pricing strategies aimed at internalizing the costs of carbon emissions. In short: putting a price on carbon emissions.

May 1, 2024
How Individual Investors Can Strengthen Carbon Markets

Carbon Markets: Definitions

How Individual Investors Can Strengthen Carbon Markets

Homaio brings a new type of demand in the EU ETS market. Investors can buy and hold EUAs, thus contribute to long-term price appreciation of carbon allowances. In turn, this enhances the bloc’s decarbonization efforts.

May 1, 2024
What is the EU ETS 2 Price Forecast for 2030?

Carbon Markets: Definitions

What is the EU ETS 2 Price Forecast for 2030?

The EU ETS 2, or the second EU Emissions Trading System, will bring significant changes to carbon markets in the European Union. This new phase will expand the scope of emissions regulation to include building construction, heating, and road transport.

May 1, 2024
What is the EU ETS emissions data published in 2024?

Carbon Markets: Definitions

What is the EU ETS emissions data published in 2024?

The EU ETS (European Union Emissions Trading System) covers emissions from sectors energy production, industrial activities, and aviation. In 2023, total emissions decreased by 15.5% mostly driven by reductions in emissions from power generation (they fell by 24%).

May 1, 2024