Market leaders in bullish mood

Channels: Carbon, ESG, Markets, Renewables

Companies: Baker McKenzie, Element Markets, Evolution Markets, Nephila, Vertis

Major environmental markets saw healthy growth in activity in 2018 and the winners of our annual Market Rankings see plenty of reasons for optimism about next year.

Most of the winners in this year’s Market Rankings are entering 2019 with a spring in their step, buoyed by favourable regulatory changes and growing voluntary engagement by large corporates.

 “Market sentiment has been good,” says Steffen Koehler, chief operating officer at Germany’s EEX exchange, referring to the EU Emissions Trading System – the world’s largest carbon market. He attributes this optimism mainly to “comprehensive policy reform” designed to tackle the imbalances in supply and demand for emission allowances which have dogged the market for the past decade.

In anticipation of tighter supply, EU Allowance prices have soared above €20 from below €4.5 in the past 18 months.

Other carbon markets have had more mixed fortunes, although it was a “fantastic year” for the Regional Greenhouse Gas Initiative (RGGI) in the north-eastern US, says Randy Lack, chief marketing officer at Element Markets. 

The other mandatory North American market, which combines California and Quebec, suffered a blow in July when Ontario pulled out of the programme. However, the market has largely shrugged off this setback.  “It shows on a longer-term basis that linkage and de-linkage is possible and the markets are flexible,” says Nicolas Girod, managing director of markets at advisory firm ClearBlue Markets.

Meanwhile, in the renewable energy markets, volatility has been the name of the game due largely to oversupply in mandatory US markets and unusual weather in Europe. Higher state targets for supplies of renewable power should help restore balance in the US markets next year and regulatory changes are also expected to boost European demand for renewables, industry leaders say.

How the rankings were conducted:

Companies were emailed in October and asked to nominate the leading traders, brokers and service providers in the markets covering carbon emissions, renewable energy certificates, and weather and catastrophe risk, via an online survey. Voters were asked to vote only in those categories in which they had direct experience and to make their judgements on the basis of: efficiency and speed of transaction; reliability; innovation; quality of information and services provided; and influence on the market, not just the volume of transactions handled. More than 850 completed responses were received. Only one vote per company site was allowed and those firms that nominated themselves had their votes disregarded.

In particular, Rankings winners point to the recently revised Renewable Energy Directive (RED II), which sets a new renewable energy target for the EU for 2030 of 32%, replacing a previous target of ‘at least 27%’.

Another striking feature of 2018, which is expected to continue next year, is increasing demand from voluntary corporate buyers, particularly from the RE100 companies who aim to obtain all their electricity from renewable sources by 2030.  

Related growth in corporate concern about climate-related risks has also boosted demand for weather hedging. There’s “a growing awareness of climate change, and that is helping this market,” says David Whitehead, co-CEO at advisory and data firm Speedwell Weather.

2017’s devastating hurricanes – Harvey, Irma and Maria – have prompted numerous enquiries “from clients in those regions asking what they can do to protect themselves from similar events,” notes Claire Wilkinson, managing director, alternative risk transfer solutions, at Willis Towers Watson.

And, despite many investors incurring losses as a result of these and other devastating natural disasters, more capital came into the cat bond market in 2018 and a record amount of insurance linked securities have been issued.

To go back to the awards page click here.

EU EMISSIONS TRADING SYSTEM
CategoryWinnerRunner-up
Best broker, spot & futures Evolution Markets ETS Markets
Best trading company, spot & futures Vertis Mercuria
Best broker, options Vertis PVM (TPIcap)
Best trading company, options Vertis Vitol
Best advisory/consultancy ETS Markets Redshaw Advisors
Best law firm Baker McKenzie Norton Rose
Best verification company Lucideon TUV Nord
Best exchange/clearing house EEX ICE
NORTH AMERICAN MARKETS (California)
CategoryWinnerRunner-up
Best broker, spot & futures Evolution Markets BGC Partners
Best trading company, spot & futures Element Markets Vitol
Best broker, options Evolution Markets BGC Partners
Best trading company, options Element Markets RBC
Best offset originator BlueSource Element Markets
Best advisory/consultancy ClearBlue Markets Element Markets
Best law firm Baker McKenzie Latham & Watkins
NORTH AMERICAN MARKETS (RGGI)
CategoryWinnerRunner-up
Best broker Evolution Markets ClearBlue Markets
Best trading company Element Markets Mercuria
NORTH AMERICAN MARKETS (All)
CategoryWinnerRunner-up
Best advisory/consultancy ClearBlue Markets Element Markets
Best law firm Baker McKenzie Eversheds Sutherland
Best verification company Ruby Canyon Engineering GHD Environmental
Best project developer Blue Source Element Markets
CHINA
CategoryWinnerRunner-up
Best advisory/consultancy ICF International N/A
Best law firm BakerMckenzie N/A
Best verification company CQC N/A
Best exchange Shanghai Environmental Exchange N/A
KYOTO PROJECT CREDITS (JI and CDM)
CategoryWinnerRunner-up
Best broker, secondary market Vertis South Pole
Best trading company, secondary market South Pole Vertis
Best advisory/consultancy South Pole Kanaka Management Services
Best law firm Baker McKenzie Norton Rose
Best verification company EPIC Sustainability Services Enking International
Best project developer South Pole Kanaka Management Services
     
WEATHER MARKETS
WEATHER RISK MANAGEMENT - NORTH AMERICA
CategoryWinnerRunner-up
Best broker Choice Energy Aon Benfield
Best dealer/structured product seller Nephila Climate Munich Re
WEATHER RISK MANAGEMENT - EUROPE
CategoryWinnerRunner-up
Best broker Willis Towers Watson Choice Energy
Best dealer/structured product seller Nephila Climate Munich Re
WEATHER RISK MANAGEMENT - ASIA
CategoryWinnerRunner-up
Best broker Choice Energy N/A
Best dealer/structured product seller Nephila Climate Sompo Global Weather
WEATHER RISK MANAGEMENT - AUSTRALIA
CategoryWinnerRunner-up
Best broker CQ Partners N/A
Best dealer/structured product seller Nephila Climate Swiss Re
WEATHER RISK MANAGEMENT - GLOBAL
CategoryWinnerRunner-up
Best advisory/data service Speedwell Nephila Climate
Best law firm Reed Smith Norton Rose
CATASTROPHE RISK MANAGEMENT - GLOBAL
CategoryWinnerRunner-up
Best dealer (structurer/arranger) Nephila Capital Goldman Sachs
Best broker Guy Carpenter N/A
Best advisory N/A N/A
     
RENEWABLES MARKETS
RENEWABLE ENERGY CERTIFICATES - NORTH AMERICA
CategoryWinnerRunner-up
Best broker Evolution Markets Karbone
Best trading company 3Degrees Element Markets
Best advisory Karbone Element Markets
Best law firm Baker McKenzie N/A
RENEWABLE ENERGY CERTIFICATES - EUROPE
CategoryWinnerRunner-up
Best broker Cleanworld STX Commodities=
Best trading company South Pole Vertis
Best advisory South Pole N/A
Best law firm Baker McKenzie N/A
RENEWABLE ENERGY CERTIFICATES - AUSTRALIA
CategoryWinnerRunner-up
Best broker TFS Green N/A
Best trading company South Pole N/A
Best advisory South Pole N/A
Best law firm Baker McKenzie N/A
RENEWABLE IDENTIFICATION NUMBERS
CategoryWinnerRunner-up
Best broker Banyan Commodity Group N/A
Best trading company Element Markets Bluesource
Best advisory Element Markets Weaver
Best verifier Weaver EcoEngineers
Best law firm Eversheds Sutherland N/A