Markets
The markets that set your compliance cost.
Carbon is the headline, but it is rarely the whole exposure. We cover the four markets that move together on an industrial balance sheet, and we price them as one position rather than four.
01 · Carbon & Environmental
Allowances, certificates and credits.
Four regimes, four different definitions of a tonne. The instrument you need depends entirely on which one binds you — and getting that wrong is expensive twice over.
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EU ETS (EUA) and UK ETS (UKA)
Spot and forward cover for installations and aircraft operators, sized against free allocation and the annual surrender deadline rather than against the calendar year.
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CBAM certificates
Cover for the carbon border adjustment liability on imported cement, iron and steel, aluminium, fertilisers, electricity and hydrogen, including the embedded-emissions data work behind it.
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CORSIA eligible units
Sourcing of units that meet the eligibility criteria for the current phase, with the corresponding-adjustment documentation that makes them usable.
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Voluntary carbon and attribute certificates
Removals and avoidance credits selected against a stated quality bar, plus guarantees of origin and I-RECs for electricity attribute claims.
Which instrument applies?
- EU installation above thresholdEUA
- UK installation above thresholdUKA
- Importing covered goods into the EUCBAM
- International aviation operatorCORSIA + EUA
- Voluntary net-zero claimVCM credits
- Renewable electricity claimGO / I-REC
Many clients sit in more than one row at the same time. Overlap is normal and needs to be netted deliberately, not twice.
Where carbon meets the energy curve
A carbon hedge placed without reference to the power and gas curve is only half a hedge. The clean spark spread, the clean dark spread and the fuel-switching point all move with the allowance price, and they decide whether your carbon cost is actually recoverable.
- Clean spark spreadGas − power − carbon
- Clean dark spreadCoal − power − carbon
- Switching pointWhere the merit order flips
02 · Energy
Power, gas and the fuels behind the mandate.
Energy is both the largest input cost for most industrial clients and the main transmission channel for the carbon price. We cover it on the same desk for that reason.
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Power
Baseload and shaped cover across the main European and UK delivery zones, including PPA structuring and indirect cost compensation considerations.
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Natural gas and LNG
TTF and NBP hedging for process and thermal load, plus LNG index exposure for clients with cargo-linked supply.
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Oil products
Gasoil, jet and fuel oil cover for transport fleets, aviation operators and standby generation.
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Biofuels and feedstocks
HVO, FAME, biomethane and SAF exposure, where the compliance value of the molecule often exceeds its energy value.
03 · Metals
One tonne, two prices.
For importers of aluminium and steel, CBAM has split the cost of a tonne into a metal price and an embedded-carbon price. They are set in different markets and they do not move together.
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Base metals
Aluminium, copper, zinc and nickel cover for manufacturers and importers, sized to a physical delivery schedule rather than to a round lot.
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Ferrous and steel inputs
Exposure across scrap, hot-rolled coil and the raw-material complex, read together with the CBAM liability on the same imports.
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The embedded-carbon leg
We model the certificate requirement per tonne by origin and route, so the carbon hedge is sized to the actual import plan and not to an industry default value.
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Low-carbon premia
Where a green or low-carbon grade carries a premium, we help assess whether paying it is cheaper than carrying the certificate cost.
Imported aluminium, decomposed
Illustrative structure of the landed cost once CBAM applies.
- LME cash priceMetal market
- Regional physical premiumPhysical market
- Freight & logisticsFreight market
- CBAM certificates on embedded emissionsCarbon market
- Duty & handlingFixed
Three of the five lines are hedgeable, in three different markets. Hedging only the first one leaves most of the volatility untouched.
04 · Freight & Shipping
Compliance has reached the water.
Maritime operators now carry an allowance obligation and a fuel-intensity target on top of a freight rate and a bunker bill. Four moving parts, all correlated.
Freight derivatives
Dry bulk and tanker route cover for charterers and cargo owners managing a physical shipping programme.
Bunker fuel
VLSFO, MGO and LNG bunker exposure, including the spread between compliant and alternative fuel grades.
Maritime allowances
Allowance requirements on in-scope voyages, including the partial-coverage rules for voyages into and out of the EEA.
Intensity & pooling
Compliance balance, pooling arrangements and penalty exposure, priced as a transferable position rather than a fine.
Next step
Not sure which of these binds you?
Send us your production, import or voyage profile and we will come back with a mapped exposure, before any discussion of instruments.