CO2 certificates - a beacon of hope for climate protection?

Our economic system contributes to prosperity, but also produces greenhouse gases such as CO2, which are mainly responsible for global warming. Therefore, one of the most important goals of climate policy is to reduce these greenhouse gases in the atmosphere. Both private individuals and companies should contribute to these goals. There are clear steps for companies to make their contribution to achieving the climate goals, such as avoiding/ reducing emissions or offsetting unavoidable CO2 emissions. Emissions trading was introduced to encourage companies to produce in a more environmentally friendly way. This gives them incentives to reduce their emissions and use more climate-friendly technologies

CO2 emission reflect the right to emit a fixed amount of pollutants such as CO2 for a certain period of time. They can be traded on energy exchanges, which gives CO2 emission rights a market price. In order to meet climate targets, the amount of CO2 emissions allowed is limited. Companies therefore need a corresponding permit to be allowed to emit CO2. These allowances are also limited and are to be reduced in the long term. In Europe, companies that "want" to emit CO2 must have a CO2 certificate and be able to prove that their emissions are covered by CO2 certificates. The purchase of certificates leads to additional costs for companies, which can induce them to emit as little CO2 as possible in order to be economically successful.

CO2 emission allowances could also be an interesting investment opportunity for investors. Usually, investors can invest in emission rights through futures traded on futures exchanges. To give investors the opportunity to participate in this price development, Vontobel offers various certificates on the ICE ECX EUA Future that reflect the price development of CO2 emission certificates with leverage. The ICE ECX EUA Future is a futures contract traded on the Intercontinental Exchange ICE Endex in the Netherlands. It is based on the European Union Allowance (EUA), the most important CO2 emission rights contract in Europe. One trading unit corresponds to one tonne of CO2 traded under the European Emissions Trading Scheme (EU ETS). The ICE ECX EUA Future serves as a price reference for trading EUAs and other CO2 emission rights in Europe.

Bull & Bear Certificate on the ICE ECX EUA Future offers investors the opportunity to participate directly in the price development of CO2 emission rights with leverage and thus to link their financial investment to an increasingly important resource. For example, with the leverage from 3-12 on a Bull & Bear certificate one can speculate in the price developments of CO2 futures contracts on a short-term basis, investors can benefit from the development of the markets, but must also bear the price risk of the underlying, the issuer risk and the path dependency of a Bull & Bear Certificate.

Bull & Bear products can be traded at your local brokerage firm or bank in the local currency. Bear in mind that this type of investment bear high risk and offers no capital protection.