Top Traders Unplugged OI18: The Carbon Trade, Without the Illusion ft. Mike Azlen
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Aug 27, 2025 Mike Azlen, the founder of CarbonCap and a leader in carbon-focused hedge funds, joins the discussion to demystify carbon markets. He emphasizes why regulated markets are more effective for real emissions cuts than voluntary offsets. The conversation delves into the intricacies of compliance carbon markets, pricing challenges, and the impact of legislative frameworks. Azlen also highlights innovative investment strategies and how carbon markets can align incentives with tangible climate outcomes, making the case for informed investment in this evolving landscape.
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How Cap-And-Trade Delivers Least-Cost Abatement
- Cap-and-trade uses falling permit supply and profit motives to force least-cost emissions cuts.
- Companies choose abatement when internal abatement cost < carbon price, harnessing market incentives to reduce emissions.
Why Markets Beat Taxes Politically
- Carbon markets outperform taxes politically and practically because markets avoid the word 'tax' and still generate revenue.
- Auction revenues are recycled into energy efficiency and low-carbon projects, reinforcing the policy impact.
Carbon Markets Are Currently Fragmented
- Regional carbon prices differ widely today but policymakers intend to link markets over time.
- Pairwise correlations across the five traded markets are near zero, offering strong portfolio diversification benefits.