Carbon Markets complements BBVA’s sustainable offering. We support our clients in managing regulatory carbon risks and voluntary pledges as part of the net zero journey.
We provide expertise and market access to emission trading systems and carbon credits, as well as offering solutions in:
1. Carbon risk management and hedging
BBVA Carbon Markets: “Your strategic partner for the low carbon transition and Net-Zero journey”
DISCOVER CARBON MARKETS
COMPLIANCE CARBON MARKETS
During the last few years, more ambitious climate policies created significant momentum in carbon pricing. There are 68 global initiatives that tax or price carbon, covering approximately 23% of global greenhouse gas emissions.
The European Union Emission Trading System (EU ETS), is by far the largest and most liquid ETS.
It caps the total level of GHG emissions on large emitters in the European Union. By creating supply and demand for emission allowances, the EU ETS establishes a market price for GHG emissions. The cap helps ensure the required emission reductions targeted to meet Europe’s climate goals under the Paris Agreement will take place, and keep the emitters within a pre-allocated carbon budget. This cap decreases every year.
CARBON RISK MANAGEMENT AND HEDGING:
Companies under the EU ETS obligations, must surrender allowances in line with their verified emissions annually. The increase in prices and significant volatility of EU allowances creates the need for a strategic risk management strategy.
We will support our clients in defining their risk management strategy and provide hedging solutions.
Companies that receive free allocation allowances, receive them in February of the current year, but still have until April next year to surrender them. They can optimize their financing costs by selling the EU allowances and entering into a repurchase agreement on a forward basis.
Companies looking for alternative investments for yield or diversification purposes. The EU allowances typically trade at a Contango (forward prices above spot levels). This allows companies to purchase allowances on a spot basis, immediately sell them on a forward basis, and lock in a positive spread.
VOLUNTARY CARBON MARKETS
The Voluntary Carbon Market will support companies on their net zero-journey.
Voluntary carbon credits are generated through projects that either reduce greenhouse gas (GHG) emissions compared to a baseline (GHG avoidance and reduction projects) or capture GHG emissions (GHG removal and sequestration projects).
We will support clients, providing access to the market and buying and selling high quality carbon credits.