Carbon allowances and Renewable certificates markets are widely utilised by policy-makers to stir the direction and pace of Energy transition and decarbonisation worldwide.

According to BNEF figures, a fifth of global emissions are now regulated by a compliance based-carbon market. Lawmakers are constantly introducing reforms to include more industries and companies into regional carbon and renewable certificates schemes, increasing the demand for allowances and as a consequence driving prices up. US Carbon markets, and in particular California (illustrated in the chart below), have benefited from a steady market rally in 2023. This rally was at a faster pace than European markets where Emission Allowances prices have instead declined, closing just above 64 Eur/MT on Thursday the 31st of January, after briefly peaking above 100 Eur/MT last February.

California market gains have been driven by aggressive decarbonisation targets and annually increasing mandated auction floor prices, with the ambitious plan to reduce greenhouse gas emission by 85% below 1990 levels before 2045. The United States have been showing sustained commitment to reduce greenhouse gas emission and increase renewable energy output, thanks to a number of factors including robust regulatory framework, governments incentives and growing environmental awareness.

Renewable Portfolio Standards (RPS) have also been implemented in a growing number of US states alongside Carbon Offset regulations. Energy providers that don’t meet the minimum quota of renewable energy in their electricity supply mix must purchase RECs (certificates issued when 1 MWh of electricity is generated from a renewable energy resource) in OTC Markets.

Faced with regulatory uncertainty, market volatility and growing concerns over long-term, sustainable supply, energy players need reliable market data to evaluate their portfolio. At TraditionData we offer US renewable players unrivalled RECs and Emissions pricing data, leveraging Tradition’s leading position in the broking space.

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