EUA research, - analysis, and - price forecasts

Reducing costs with strategic EUA purchases and hedging.

In Europe, approximately one billion emissions rights (EUAs) are allocated and decommissioned each year. EUAs are a major cost factor to thousands of companies throughout Europe and the world.

Carbon research dashboard

CAP₂ helps you better understand European emissions trading. With our daily updated forecast of EUA price trends, you can find the optimal time to buy or sell, build up inventories, or hedge existing positions in the derivatives market. Whether you are a trader, industrial customer, or utility company, our knowledge keeps you one step ahead of the ETS.

We leverage our expertise in infrared satellite imagery analysis with a broad based data fusion approach to describe demand and supply dynamics in the European carbon market. To our knowledge, CAP2 is the only company using such a wide range of near real time and real time data to monitor carbon-related business activities to understand EUA price dynamics.

Use cases

Optimizing EUA Purchases to Save 5-10% Annually

The client spends a substantial amount on EUAs every year. Our track record suggests that we can help to reduce the purchase price by 5% to 10% relative to a random approach by optimizing the timing of the purchase.

Maximizing EUA Returns with Optimized Selling Timing

The client wants to optimize the timing of selling EUAs, again using our research that helps to increase the expected return by 5% to 10%.

Optimizing EUA Hedging with Strategic Future Sales

The client wants to temporarily hedge an existing position of EUAs by selling a future. We constantly advise the client on the optimal hedge position with a reduced frequency of signals to account for practical issues when hedging positions in EUAs.

Data and drivers

Even a broad-based analysis of business cycle data doesn’t perfectly tell you what is going on in real time. Also, coincident indicators are to some extend backward-looking, and leading indicators exhibit quite a lot of noise. This is why we analyse the infrared radiation of factories all over Europe measures by Satellites like Landsat or Senteniel to get an even better understanding of real time production and subsequent demand for EUAs.

Changes in relative prices between gas and coal play a major role understanding demand for EUAs. As gas prices relative to coal prices go up, electricity production with coal plants becomes more attractive from an economic point of view. As coal plants need more EUAs for a given amount of electric energy being produced, higher gas prices relative to coal prices (other things being equal) lead to higher EUA prices.

Our philosophy

Ray Dalio, founder of Bridgewater Associates, is considered one of the most successful systematic investors in the world. Like him, we do not believe in long-term market forecasts. The factors influencing the price of EUA are too numerous and too complex for that. Instead, we focus on what really matters:
the current market environment, today's fair price – and clear signals as to when you should buy or hedge.

Carbon research dashboard