CIG has learned from prominent sources that the ever expanding $126 billion global carbon market is likely to reach a point where it will challenge both gold and crude oil as the standard hedge against inflation risk and equities, as investors feel they can present some protection against increasing consumer prices.
With the U.S. slowly approaching cap and trade legislation and Australia seeming likely to have its bill passed shortly the market is predicted to strengthen and mature to become a commodity akin to crude oil in the nature of how traders use it as a strategy, according to some industry participants.
The European Unions emissions trading scheme was launched in 2005, trading permits called EUA’s (EU Allowances) and are currently the international benchmark for emissions markets.
It is becoming more and more common to see both oil and German power prices as well as natural gas and coal correlated with EAU’s, a good indication, CIG is told, of this new markets growth is that it is being looked to for direction by these older commodities.
The EU’s executive commission is hopeful that the globes major emission trading exchanges will all be linked by 2020.
CIG understands that it is felt that this aim is being delayed by the U.S administrations slow progress in accepting a climate bill as well as by the generally accepted feeling that no legally binding pact will emerge from the December Copenhagen climate talks.
