Open Bets on Carbon Futures in North America Are at Record Levels Ahead of Presidential Election

By Mathew Carr

Oct. 7, 2020 — London — Traders are making record bets on North American carbon and renewable futures, as Joe Biden leads in polls ahead of next month’s presidential vote.

Open interest, a measure of trades that have not yet been closed, is at record levels for the time of year, according to data from ICE, the exchange group with most environmental business.

See this snip of a chart on ICE’s website:

From ICE website: https://www.theice.com/microsite/usenvironmentalmonthlymarketreport

The chart shows open positions and trading volume for California carbon allowances, Regional Greenhouse Gas Initiative contracts and Renewable Energy Certificates, by month.

While the August “open interest” figure is slightly lower than previous months this year, it’s the highest ever for August. September data will be published soon.

Biden has an ambitious plan to tackle climate change in the U.S., which is the single country most to blame for the global problem. Near-record greenhouse gas emissions are trapping heat in the atmosphere, which is boosting wildfire, drought, storm and flooding costs around the world.

China, which has overtaken the U.S. as the world’s biggest emitter, has set a target to become carbon neutral by 2060.

With a bigger economy, but much smaller population, the U.S. would seek to achieve a 100% clean energy economy and net-zero emissions no later than 2050, Biden has said (should he win office). He wants to enact legislation in the first year of his presidency that establishes an enforcement mechanism to achieve the 2050 goal, including a target no later than the end of his first term in 2025.

Polls put Biden in the lead to beat incumbent Donald Trump, after the latter was hospitalised for the #coronavirus.

(Updated Thursday Oct. 8 to add details of Biden’s climate plan)

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