With geopolitical risk suddenly a top consideration for advisors, seeking diversification of exposure to global carbon markets over concentrated exposure could be an answer for investors concerned about volatility and uncertainty.
Natural gas prices rose and are now up 30%, which generally means that carbon allowance prices also increase because greater use of natural gas equates to more carbon allowances being needed.
“Some see huge margin calls across the broader global equity investment landscape creating liquidity needs that are tugging on all risk assets – the old chestnut of ‘risk off’ mode.
Oliver anticipates that carbon markets could experience volatility for the near future while investors and markets process the events and implications going forward.