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Carbon Markets May be Poised for Resurgence

Around 2008, the trading of carbon allowances, specifically in the US, hit a serious lull. There wasn’t enough interest, not enough big players, and not enough money to go around. Selling prices within RGGI auctions were near all-time lows between 2008 and 2011, and Climate Exchange was being acquired by the IntercontinentalExchange (ICE) in 2010. For a while, things seemed bleak. Lately though, the narrative has changed. 

On March 11th of 2015, RGGI allowances were sold at the highest price in the history of the program. In mainstream news, researchers at the National Oceanic and Atmospheric Administration (NOAA) reported that the average global concentration of atmospheric carbon dioxide had exceeded 400 ppm for the first time in recorded history on May 6th. Other recent headlines, like those in China, have also been prevalent in the media. One of the major ways in which China plans to reduce pollution is by unveiling a national carbon permit trading scheme in 2016. Once launched, it would automatically become the biggest emissions trading scheme, taking the title from the EU Emissions Trading System.

Enter the Carbon Trade Exchange (CTX). CTX is a trading platform, originally launched in 2009, which supports and operates spot exchanges of carbon credits, RECs, and water allocations. CTX recently launched a new platform which will enable its users to buy and sell allowances from (RGGI), and will soon be unboxing an application for the California Cap-and-Trade Program. Considering the current landscape of the market, both in the US and globally, CTX is expanding at quite an opportune time.

The technology that they have developed and the growth that they have experienced speaks to a larger theme altogether though. Accessible, secure, and unified trading platforms, plus a growing interest in carbon trading as a whole, could very well mean a noticeable resurgence of these markets. This is not to say that carbon trading is the answer to the world’s obvious GHG problems; theoretically, successful cap and trade programs will lead to an equal or greater investment in efficiency and process improvements. Momentum is undoubtedly positive nonetheless, and where there is momentum, there is usually opportunity.