Email of the day on carbon emission trading
you are showing charts and talking a lot about carbon emission certificates in the EU. (MO2 generic future on Bloomberg). is there any tradeable or investable instrument out there? tkx a lot!
David Fuller and Eoin Treacy's Comment of the Day
Category - Precious Metals / Commodities
Biodiesel and Renewable Diesel: It's All About the Policy
This article from farmdocdaily may be of interest. Here is a section:
Biomass-based diesel (BBD) production in the form of renewable diesel is undergoing a major boom. What is not well understood is that the boom is entirely policy driven. This is most directly evident in the fact that the price of BBD (as represented by FAME biodiesel) is about twice as expensive as petroleum diesel. The implication is that little or no BBD would be produced and consumed in the U.S. without substantial policy incentives. A further implication is that the renewable diesel boom cannot be understood without understanding the policies driving the boom. In this article, we use a simple model of the BBD market to illustrate the impact of a variety of policy scenarios. When considered in isolation, the market impact of the policies considered are fairly straightforward.
The analysis becomes much more complicated when multiple policies are in effect at the same time. In particular, the impact of a given policy may be heavily dependent on which other policies are in place at the same time. In the U.S., all four of the following policies are presently in place and interact to determine the price and quantity of BBD: i) blenders tax credit; ii) RFS mandates; iii) carbon credits in California; and iv) import duties (tariffs). The interactions between these policies can produce surprising and poorly understood economic outcomes.
Britain's Easing Inflation Puts End of BOE Rate Hikes Into Sight
This article from Bloomberg may be of interest. Here is a section:
The concern is that inflation doesn’t tick down as quickly as the BOE anticipates. Prices increased 11.1% in October, the most in 41 years. That eased in each of the past three months, but the latest inflation reading at 10.1% remains five times the BOE’s target rate.
The BOE will be heartened by news that inflation in the services sector eased in January. It’s one of the key indicators being watched by policymakers, who see it as gauge of domestically generated inflation that is hard to shift once it takes hold.
The other red flag is wage growth, which is now running at the fastest pace on record outside of the pandemic as labor shortages hand workers unprecedented bargaining power.
The BOE fears inflation could become entrenched as companies keep raising prices to cover their salary costs. There were some signs of hope in the latest data, however, with figures for December alone showing a slowdown in private-sector pay increases.
Dash for $10 Trillion of Metals for Energy Transition Starts Now
This article from Bloomberg may be of interest. Here is a section:
Getting to net zero could require almost $10 trillion of metals between now and 2050, according to BNEF, with annual demand peaking at close to $450 billion in the mid-2030s. While steel and aluminum are expected to see the most demand growth in terms of absolute volume, copper is set to be the most valuable opportunity, with an estimated $3.4 trillion of the red metal needed to avert climate disaster.
In total, a whopping 5.2 billion metric tons of metals will be necessary to underpin a net-zero transition, with nearly four times as much metal due to be consumed in 2050 versus today.
Newmont offers to buy Australia's biggest miner amid gold merger spree
This article from the Financial Post may be of interest. Here is a section:
Yamana’s outgoing executive chair Peter Marrone told The Financial Post last month that he expects a wave of gold mergers as executives and investors seek to maintain margins amid higher production costs and declining grades of the metal.
Resource industries are on the front lines of the climate challenge, whether it be coping directly with extreme weather, or indirectly through rising costs associated with adjustment and policies such as carbon taxes. Gold miners face an additional layer of difficultly because their deposits are yielding less ore that’s dense with gold. Lower grade mines can still be profitable, but only if extraction costs are lowered.
Aside from the sale of Yamana, which has properties and mines in Canada, Brazil, Chile and Argentina, there have been at least eight notable combinations since 2018, when Barrick Gold Corp. and Randgold Resources Ltd. announced an $18-billion, zero-premium, all-share merger.
Dollar Soars After Jobs Surprise Reignites Higher Rates Bets
This article from Bloomberg may be of interest. Here is a section:
A broad gauge of dollar strength jumped after the jobless rate in the US hit a 53-year low as traders amped up bets on a higher policy rate.
The Bloomberg Dollar Spot Index extended gains for its biggest two-day climb in four months after data highlighted the resilience of the labor market and another report showed resurgence in consumer demand, suggesting even more tightening may be in store from the Federal Reserve.
The greenback gained as much as 1.2%, climbing against all of its peers in the Group of 10, with the Japanese yen, the Australian dollar and New Zealand dollar falling the most.
“The headline number for nonfarms was shocking, and the US dollar is clearly reacting to that,” said Bipan Rai, a currency strategist at Canadian Imperial Bank of Commerce. “We still have plenty of data to comb through before the picture is complete.”
China's CATL Is Said to Pick Banks for $5 Billion Swiss GDR Sale
This article from Bloomberg may be of interest to subscribers. Here is a section:
CATL accounts for the largest share of the global electric-vehicle battery market, according to data from Seoul-based SNE Research. It sold a total of 165.7 gigawatt-hours of batteries in the January-November 2022 period, almost three times as much as second-placed BYD Co., a Chinese automaker that also manufactures batteries.
CATL’s market share was about 35% in the first 10 months of last year. The Fujian-based company supplies carmakers including Volkswagen AG, Geely Automobile Holdings Ltd., Nissan Motor Co. and Tesla Inc., which delivered fewer EVs than expected last quarter, despite offering some price cuts.
In 2017, CATL raised about $822 million in an initial public offering in Shenzhen. The company raised another 45 billion yuan ($6.7 billion) in a private share placement last year. China Securities was the lead sponsor, while CICC, Goldman Sachs and UBS were among the co-lead underwriters.
Shares of CATL have fallen about 18% in the past year, valuing the company at about $172 billion.
GM to help Lithium Americas develop Nevada's Thacker Pass mine
This article from Reuters may be of interest to subscribers. Here is a section:
GM would supplant China's Ganfeng Lithium(002460.SZ) to become Lithium Americas' largest shareholder. GM has also agreed to buy all the lithium from Thacker Pass when it opens in 2026 - roughly 40,000 tonnes per year.
Under the agreement, GM will buy $650 million of shares in Lithium Americas in two equal parts, with the first tranche coming only if Lithium Americas prevails in an ongoing court case. A U.S. judge earlier this month said she would rule "in the next couple of months" in the case, which centers on whether former U.S. President Donald Trump erred when he approved the mine just before leaving office in 2021.
Zero-emission Steel Won't Happen Without Trade-offs, Scientists Say
This article from the Washington Post may be of interest to subscribers. Here is a section:
The steel industry is working on solutions. According to the Leadership Group for Industry Transition, at least 73 green steel projects are in progress. But the researchers say the technology just isn't there yet.
"These technologies still face serious technical, economic, and social challenges, and have yet to be implemented at scale," said Takuma Watari, a researcher at the National Institute for Environmental Studies in Japan and the paper's first author, in a news release. It's still unclear whether enough electricity will be available in the future to power these innovations, he said.
Better processes for recycling steel scraps into high-quality materials are needed, the researchers write. They call for partnerships between the steel industry and users in a variety of sectors. But the current system "is incompatible with a zero-emission future," they write.
Australia's 4Q CPI Gives More Reason to End Hikes in Feb
This note from Bloomberg may be of interest. Here it is in full:
Australia's surprisingly strong 4Q inflation isn't likely to phase the Reserve Bank of Australia. The headline outcome exceeded consensus estimates, but undershot the central bank's forecasts - and isn't a threat to our view that a February rate hike is likely to be the last of this cycle.
The economy’s inflationary pulse largely reflects temporary shocks, centered on utilities and airfares in 4Q. A number of other categories showed continued signs that pressures are set to subside in 2023. The central bank’s expectation for a lift in wage growth - necessary for inflation to be sustained in the target band - looks increasingly vulnerable given emerging signs of a softening labor market. Click on the Text tab for the full report.