Carbon markets aim to incentivise emissions reduction
The big carbon short
Commodity traders will help solve a forthcoming large carbon short in the voluntary offset market
Physical commodity traders love a short position. It allows them to try and source a commodity for delivery at a lesser price than where the short was initially indexed—in the worst case, they match their derivatives hedges and physical contract to the same index and close out their positions at breakeven. Traders prefer commodity shorts to longs because they can maximise their trading skills, market knowledge, and contacts across the whole market as they try to find the cheapest-to-deliver commodity. They review transport costs, financing and contract specifications when attempting to meet their obligations. It is detailed market and product knowledge that enables them to succeed. The likel
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