Key takeaways
Key takeaways
- The climate transition is an unprecedented shift in terms of investment, technological change and behavior change.
- Carbon credits are one of the tools in the toolkit to support and accelerate that transition.
- To make full decarbonization more economical, carbon prices will have to reach a range of USD 100 to USD 500/metric tonne.
- A carbon credit represents one metric tonne of carbon dioxide or greenhouse gas equivalent.
- Two types of carbon credits: compliance carbon credit and voluntary carbon credits.
- Cost, supply and quality dynamics impact the price of a credit.
- The European Commission (EC) releases a fixed amount of carbon emission credits each year – the cap. That cap is coming down each year, reducing the amount of total emissions.
- With growing demand for carbon credits and more participants, we expect the market to become more standardized.
About the authors
Rebecca Idell
Head of Sustainable Finance and ESG Structuring, UBS Investment Bank
Rebecca joined UBS in 2016 and is an Executive Director responsible for Global Markets Sustainable Finance and ESG Quantitative Investment Strategies (QIS) Structuring.
Virat Agarwal
Head of Commodities Structuring, UBS Investment Bank
Responsible for a market leading commodities business across beta, enhanced beta, risk premia, structured products and corporate hedging. He is also a Cross-Asset QIS (Quantitative Investment Solution) Structuring Specialist with extensive experience in designing rates, emerging market and FX based QIS indices.
Ray Fuller
Head of Indexed Alternatives Portfolio Management, UBS Asset Management
Responsible for the development and management of investment portfolios across derivative products, ETFs, commodities and structured funds.
Ray joined UBS Asset Management in 2012. Prior to this he was a portfolio manager within the Structured Solutions team at Aviva Investors where he was responsible for portfolio construction and management. Prior to this Ray spent three years at UBS Investment Bank working in the Exotic & Structured Derivatives group.
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