Climate Changed
Carbon Traders Beware: Here Are the Risks as Prices Triple
- Futures open interest may show speculative nature of rally
- European Commission monitors market, intervention ‘not needed’
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European carbon futures may be trading at decade highs and outperforming every other major commodity, but the rally has its pitfalls.
The rights to pollute the atmosphere with carbon dioxide have tripled this year to more than 25 euros ($29) per ton, buoyed by incoming regulatory measures to cut the permits in circulation. With that kind of fundamental market overhaul, many analysts and traders see further gains to come, though cracks remain. Here are four: