Carbon Emissions futures are trending down 40% YoY. (I can't be happier about this as I am so against this whole concept, but nevertheless, one opinion doesn't count).
Background of Carbon Credit Trading: The carbon trade is a result of the Kyoto Protocol, which called upon various countries to reduce their greenhouse gas emission rates. Parties that took part in this protocol can buy and sell the amount of greenhouse gas credits they have in the form of stocks. These credits represent how much carbon gas a company is allowed to emit under this protocol.
Carbon emissions trading is used to allow companies to sell unwanted or unneeded credits for the amount of carbon gas they can emit under the Kyoto Protocol. The key factor that influences carbon trading prices is climate change. As climate change rates increase, the price of carbon emission credits rises in tandem.
As the emission norms become stricter, the need for such carbon credits will increase (personally, I don't like the idea of carbon credit buy/sell at all), and hence, these credit prices should ideally increase.
Interestingly enough, Palladium is also down by 40%. Palladium is used in Catalytic converters, which are then used to reduce vehicle emissions.
Reduced vehicle emissions mean a lesser requirement for carbon credits, but the trend shows a high correlation here (Beats the conventional expectation of a negative correlation).
Moreover, almost all the commodities used in battery manufacturing (Lithium, Nickel, Cobalt) are all trending 25 to (and guess what!!!) 40% down!
All of this is when the cost of EV manufacturing is decreasing, and sales are increasing for EVs. The next commodity, I will be noticing is semiconductors. I think the supply situation for chips is likely to become stretched in H2-2024!
Credits to Joehal for noticing this trend!
Image Credits : Joehal
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