Louis Redshaw, the former head of carbon trading at Barclays Plc, has re-entered the market following a surge in permit prices since his departure from the bank in April. With European Union (EU) allowances experiencing a 33 per cent increase this year, Redshaw is actively buying and selling permits for his own account. This comeback reflects the positive performance of the carbon market, driven by EU lawmakers’ efforts to address oversupply and boost prices. In this blog post, we will delve into Redshaw’s return to carbon trading and the factors contributing to the market’s resurgence.
Strong Permit Price Performance
EU permit prices have witnessed a significant rise, outperforming 80 other commodities tracked by Bloomberg. Currently trading at their highest level in over a year, permit prices reached 6.74 euros per metric ton on the ICE Futures Europe exchange in London. Analysts predict further price growth, with projections of permits rising as high as 15 euros by 2015. Redshaw believes that the market has the potential to double within the next 18 months, making it an attractive opportunity for traders.
Measures to Address Oversupply
EU lawmakers are finalizing plans to curb the unprecedented oversupply of permits and stabilize prices. The European Commission is proposing the creation of a permanent reserve of allowances, starting in 2021, to manage future surpluses or shortages. Redshaw sees this reserve as an encouraging development, as it minimizes political interference and operates based on transparent rules. This initiative demonstrates the commission’s commitment to tackling the oversupply problem and restores confidence in the EU’s carbon market.
Market Outlook and Global Impact
The successful re-establishment of the EU’s emissions trading system as a central pillar of climate policy will generate growing interest in carbon markets worldwide. Market experts, including Martin Schoenberg from Climate Change Capital Ltd., anticipate that carbon prices may average around 40 euros per ton from 2019 to 2030. This positive market outlook highlights the potential for long-term growth and investment opportunities in carbon trading.
Louis Redshaw’s return to carbon trading aligns with the market’s resurgence, characterized by rising permit prices. With the EU taking measures to address oversupply and boost market stability, confidence in the carbon market is being restored. Redshaw’s decision to re-enter the market reflects his belief in its future prospects and favourable conditions. As the carbon market continues to evolve and gain momentum, it presents new opportunities for traders and investors.