#FUNGIBLE #CARBON - Power, Utility and Energy. Ahead of our attendance at Ecosperity week and the #FAST conference. Use of Empati technology delivers a fungible carbon ton, the outcomes below are how we see the market evolving on the back of this new capability. A tradable unit of carbon Vs the traditional carbon credit construct, allows for the emergence of various financial securities and instruments all built around this new carbon unit: 1. Carbon Futures and Derivatives: - With a standardized carbon unit, we would likely see the development of carbon futures contracts, where market participants can buy and sell future delivery of the carbon units. - This would allow for price discovery, risk management, and speculation around the future value of the carbon units. - Additionally, we could see the creation of carbon options, swaps, and other derivatives based on the underlying carbon units. 2. Carbon-Backed Securities: - Similar to asset-backed securities, we could see the emergence of securities backed by pools of carbon units. - These could take the form of carbon-backed bonds, where the principal and interest payments are tied to the value and performance of the underlying carbon units. - Securitization of carbon units could help improve liquidity and accessibility to the carbon market for a broader range of investors. 3. Carbon Exchange-Traded Funds (ETFs) and Indexes: - With a standardized carbon unit, we could see the development of carbon ETFs that track the performance of a basket of carbon units or a carbon index. - These investment vehicles would allow investors to gain exposure to the carbon market without the need to directly hold or trade the underlying carbon units. 4. Carbon Structured Products: - More complex structured products, such as carbon-linked notes or carbon-based structured investments, could be created to offer investors customized exposure to the carbon market. - These products could incorporate features like capital protection, leverage, or embedded derivatives to cater to different risk appetites and investment strategies. 5. Carbon Lending and Borrowing: - A tradable carbon unit could enable the development of a lending and borrowing market, where entities can lend or borrow carbon units to manage their carbon footprint or speculate on price movements. - This could include carbon repo markets, where carbon units are used as collateral, or carbon lending platforms that facilitate the exchange of carbon units. The key to the development of these financial securities is the establishment of a standardised, fungible, and transparent carbon unit that can be reliably traded and used as the underlying asset. Please feel free to comment or reach out with a DM, both our CEO Stewart Dodd and COO Darren Orbart will be in attendance at Ecosperity Week this week. GenZero Temasek Monetary Authority of Singapore (MAS) BlackRock #singapore
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Chief Executive Officer @ Empati | Economics Degree. Board member, Sentient Sports
2moNow be have a universal standard unit of a fungible tonne we can now build sophisticated financial product using this unit. Carbon debt, options, mitigated future flows of CO2 and so many more