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Hedge Funds See No End to Carbon Rally After Last Year’s Surge

  • Fund managers bet permits will surpass 100 euros this year
  • Burning coal is driving emissions higher as gas prices soar
Vapor rises from the cooling tower and chimneys of the Belchatow coal powered power plant in Poland.

Vapor rises from the cooling tower and chimneys of the Belchatow coal powered power plant in Poland.

Photographer: Piotr Malecki/Bloomberg

The European Union’s carbon price gained nearly 150% last year to a record, and some hedge funds profiting from the surge say that level will be smashed in 2022.

Bullish bets from Andurand Capital Management LLP, Northlander Commodity Advisors LLP and Clean Energy Transition LLP see permits blowing past 100 euros, about 13% higher than Wednesday’s close, as nations burn more coal to keep the lights on amid soaring prices for natural gas, which also is used to make electricity. The forecasts were made before Russian military moves near Ukraine stoked geopolitical tensions and heightened concerns about gas supplies.