Global Bets on Environmental Markets Surge to Record After Trump Loses: ICE (2)

By Mathew Carr

Dec. 17-22 –LONDON: The volume of open positions on environmental markets in the U.S. and Europe together surged to a record near the end of the year, after President Donald Trump lost the U.S. vote.

The volume of open positions on ICE, the biggest exchange for environmental commodities, advanced by approximately 16% from the end of 2019 to about 2.8 million contracts, said ICE spokeswoman Rebecca Mitchell, by phone. The open positions are measured by the metric “open interest.”

Average daily volume in the environmental complex is up by approximately 20%, ICE said.

The complex includes EU carbon allowances, California futures, renewable energy certificates. Futures and options are grouped together.

Here was the situation at the end of November:

ICE website:

“Market-based mechanisms like carbon cap and trade programs are pivotal in allowing policy makers to control the quantity of carbon to align with their net-zero commitments and consequently put a price on the externality of pollution to reach those goals in the most cost-effective manner,” said Gordon Bennett, Managing Director, Utility Markets at ICE, in an emailed statement.

Because EU allowance prices have risen to record highs, the value of Dec. 2020 futures at delivery was a record 8.6 billion euros, Mitchell said.

Now that delivery has taken place in relation to the December futures, open interest will have dropped since the end of Nov. That fall happens each December — see chart.

(Updates Thursday afternoon with chart and comment, Tuesday with updated chart)

To see why there’s more interest in carbon markets, click:

To see how voluntary and compliance carbon markets are set to interact:

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