1-2-3 Carbon Markets

Estimated reading time: 2 minutes, 39 seconds

TL;DR: Salesforce to build a Voluntary Carbon Market. EU ETS Summary. Difference between amount of Carbon Offsets and their demand.

Carbon Markets are a market based attempt to help solve climate change. They use cap and trade systems help industry assign a price, and limit pollution. Markets are a piece of the solution to the "tragedy of the commons," when shared resources are abused.

This is how they work; Polluters receive credits, which they can redeem, sell or keep. When redeemed, companies can pollute up to their cap. When polluters exceed their cap, they pay massive fines. They also have the options to keep the credits, or sell. Tesla, for example, has netted billions in revenue by selling their credits.

1 Program - EU ETS

EU ETS is a Carbon Market, focused on limiting emissions of the power, aviation, and manufacturing sectors. With those industries it touches about 40% of Europe's emissions. The EU ETS has blazed the trail for other nations to follow on with their own markets.

The EU faces a fascinating challenge. It has to push European Industry to reduce its emissions, while remaining competitive. The EU ETS has proven to be an effective in reducing emissions.

The ETS reinvests its profits back into innovation, with two funds. The Innovation fund puts money into projects that help curb climate emissions in industry. The Modernisation fund helps less Economically Developed countires within the EU modernise their infrastructure.

2 Numbers

€38 Billion

The amount the European Union is expected to invest into the Innovation and Modernisation Funds between 2020 and 2030.

The funds help fuel development in clean energy and industry to boost economic growth. It aims to create local future-proof jobs and reinforce European technological leadership on a global scale. A lot of buzzwords there. It's looking to focus on innovative technologies and big flagship projects.

1.3 billion Tons

In 2021, Europe emitted over 1.3 billion tons of CO2 equivalents. The chart below shows the level of verified emissions (orange bars) vs. the allocated emissions (red bars). The difference between the red and orange bars are the tons of carbon that must be offset or paid for.

Companies that emit have an interesting dilemma. There aren't enough high quality offsets to buy. Most green industrial technologies are too expensive to transition to. This means that they pay massive fines, and are looking for alternatives.

3 Articles

Salesforce to build a Voluntary market

Salesforce, the worlds largest CRM is building a Carbon Marketplace. This is huge, because so many companies have accounts with salesforce. That means that they can begin offsetting their carbon, with a platform they already use. This lowers the barrier to entry for Carbon Finance.

Thailand launches first Carbon Credit Exchange to curb emissions

Thailand is launching its first Carbon Market. It will allow firms and government agencies to buy and sell carbon credits and track their emissions. They will also launch futures, which will allow companies to trade credits. Thailand has pledged to reach net 0 by 2065.

Countries try to dodge EU carbon market fundraising plan

The combination of an energy crisis and an economic crisis have put Europe in a tough spot. The EU has considered selling off parts of its Market Stability Reserve of Carbon Credits to help get through the upcoming winter. Will Europe is to sacrifice the integrity of its carbon markets for cheaper energy?