SmarterMarkets™
Carbon Frontiers 2025 Episode 1 | Mark Lewis, Head of Research, Andurand Capital
Feb 8, 2025
Mark Lewis, Head of Research at Andurand Capital, an expert in carbon markets, joins the discussion on the EU's complex carbon landscape. He explores the impact of the EU Emissions Trading System in balancing emissions reduction with industrial competitiveness. Mark delves into the implications of the U.S.'s exit from the Paris Agreement and how it reshapes global climate policies. He also addresses the challenges posed by the Carbon Border Adjustment Mechanism and the necessity for innovative strategies to maintain Europe's leadership in carbon trading.
43:42
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Quick takeaways
- The EU Emissions Trading System (ETS) is crucial for global carbon markets, balancing emissions reductions with industrial competitiveness amidst geopolitical challenges.
- Potential linking of the UK and EU ETS could stabilize carbon pricing while the introduction of Article 6 credits may harmonize international compliance efforts.
Deep dives
The Role of the EU ETS as a Global Benchmark
The EU Emissions Trading System (ETS) remains the primary global benchmark for compliance carbon markets due to its sustained liquidity and significant trading volume. It is the largest and longest-standing market, having operated since 2005, with hundreds of thousands of tons traded daily, primarily driven by power-generating companies which have compliance obligations. As Europe transitions towards decarbonization, the challenge of balancing industry competitiveness while enforcing emissions reductions has heightened. The EU ETS is expected to undergo significant changes as industrial sectors take on a larger role in price formation, similar to a relay race where the baton is passed from power generation to industrial users.
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