Macro Crude: Understanding Finance and The Global Economy (Oil, Stocks, Commodities, Currencies)

Macro Crude
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Macro Crude: Understanding Finance and The Global Economy (Oil, Stocks, Commodities, Currencies)

The intention of macro crude is to give you a very simple view on key movers of the macro economy, the world of oil, politics. The intersection of what moves currency markets, key themes for stocks, bonds. And really understanding the world of finance - one day at a time - and in punchy audio sessions which are less than five minutes. We will publish charts on our twitter account that cover interesting themes across major markets - whether its a chart on oil inventories in China - or a chart on the unemployment rate in the US, vote counts and we will distill it into a fact based view - while connecting the dots for you in the world of finance. With the hope that this will be both a learning opportunity, invite a discussion and more importantly be a platform that sparks ideas and debate around key macro crude topics that impact our lives.

  1. Sovereign Carbon Credits: Impact on Voluntary Markets and Price Realities

    21/09/2023

    Sovereign Carbon Credits: Impact on Voluntary Markets and Price Realities

    The emergence of sovereign carbon credits from forest-rich nations under Article 6 of the Paris Agreement is poised to transform the carbon credit landscape. However, these large-scale issuances may have significant implications for voluntary carbon credits, potentially capping their prices. Here's an overview of how these sovereign credits could reshape the market and why price expectations might need a reality check. Concise Overview Sovereign Carbon Credits on the Rise: Suriname, Honduras, Belize, and the Democratic Republic of Congo (DRC) are gearing up to offer sovereign REDD+ units under Article 6 of the Paris Agreement. This trend signifies a major shift in climate finance. Voluntary Carbon Credits at Risk: The surge in sovereign carbon credits could impact the voluntary carbon market. Many entities buy voluntary credits to meet their net-zero targets. Sovereign issuances might fulfill a significant portion of this demand, potentially lowering prices for voluntary credits. Price Expectations vs. Market Reality: While nations like Suriname aim for a price of at least $30/tonne for their carbon credits, market dynamics might bring these prices down significantly. A more realistic price range could be in the vicinity of $10-$15/tonne. Detailed Read Sovereign Carbon Credits Alter the Landscape Sovereign carbon credits from rainforest nations are becoming a game-changer in the world of climate finance. These countries, including Suriname, Honduras, Belize, and the Democratic Republic of Congo (DRC), are preparing to issue sovereign REDD+ units under Article 6 of the Paris Agreement. These credits are set to be a critical component of global efforts to combat climate change. A Promising New Market Suriname, the first country to have its REDD+ issuances verified by the UN, is in discussions with corporate and national buyers. The targeted price for its 4.8 million verified units is at least $30 per tonne. The carbon credits will be sold on a new platform, supported by the Coalition for Rainforest Nations (CfRN). Implications for Voluntary Carbon Credits The growing issuance of sovereign carbon credits poses challenges for the voluntary carbon market. Many organizations and companies purchase voluntary credits to fulfill their net-zero commitments. These credits are typically sourced from projects that avoid emissions (like renewable energy projects) or remove carbon dioxide from the atmosphere (like reforestation efforts). However, sovereign issuances could provide an alternative supply source for meeting net-zero targets. This may reduce the demand for voluntary credits, potentially capping their prices. While voluntary credits are preferred for their removal attributes, the sheer scale of sovereign issuances could make them a viable substitute. Price Expectations Meet Market Realities One significant aspect to consider is the price expectations surrounding sovereign carbon credits. Nations like Suriname aim to secure a price of at least $30 per tonne for their carbon credits. However, market dynamics may not align with these expectations. It's likely that the market will dictate lower prices for sovereign credits. A more realistic price range could be in the vicinity of $10 to $15 per tonne. This gap between price aspirations and market realities underscores the need for a reassessment of price expectations. In summary, the rise of sovereign carbon credits is poised to reshape the carbon credit landscape. While these issuances could meet substantial demand for net-zero targets, they might also impact the prices of voluntary credits. To ensure a sustainable and effective carbon credit market, stakeholders must adapt to evolving market dynamics and adjust their price expectations accordingly.

    7 min
  2. EU ETS: Shipping emissions inclusion

    24/11/2022

    EU ETS: Shipping emissions inclusion

    Shipping will be incorporated into the EU ETS from 2023, but in its current form will only require shipowners to pay for emissions on a tank-to-wake, or combustion basis, rather than on a well-to-wake, or lifecycle basis

    7 min

  3. 24/08/2022

    Japan announces a nuclear energy policy reversal

    Japan is considering building new nuclear plants (a reversal from the decision made in the after math of the Fukushima incident). Likely to be bearish for hydrogen imports into Japan as the optionality with nuclear power plant for their utilities implies less willingness to sign long term offtake agreements with H2 exporters that are very reliant on them to take FID.

    5 min

  4. 24/08/2022

    US Clean Energy bill (Inflation reduction Act 2022): Implications for CCUS/DAC as incentives change

    Improved tax incentives for CCUS/DAC in the US. We explore both the tax rebate and the potential for scaling up CCUS facilities and how they compare with the IEA NZE scenario expectation.

    8 min

  5. 22/08/2022

    Germany Canada Energy trade deal 2022

    A trade deal that encompasses green hydrogen and critical minerals. At the heart of the energy transition and geopolitics that is bringing allies Germany and Canada together with this energy trade deal

    7 min

  6. 28/05/2022

    The UK introduces an energy windfall tax: A good move or could it have been tweaked better

    Brief Analysis of the windfall tax introduced by the UK government.

    4 min

  7. 16/04/2021

    Asian LNG prices: Fundamentals for global gas markets in Q2 2021

    Q2 21: Support from LNG Supply outages in the Pacific Basin and nuclear outages in Japan and Korea ·South Korea had to shut its HanulNo.1 and 2 nuclear reactors (1.9 GW) this week after an influx of sea salps(marine organisms) clogged water systems used to cool the nuclear reactors. This is the second time in less than three weeks these units have had to be shut down and could lead to incremental demand for 1-2 spot LNG cargoes. ·Japan’s nuclear regulator has temporarily banned TEPCO from operating its nuclear plant in Niigata – due to safety concerns. TEPCO had originally planned to restart its two nuclear reactors (2.6 GW) over the May-June period and the latest ruling pushes out the chances of TEPCO operating the plant until at least H2 2022. Japanese LNG imports are expected to be up by 0.45 Mt y/y in Q2 21. ·Prelude and Sakhalin are back to full operation after undergoing maintenance in March, the next planned works will likely happen at Gorgon. ·Gorgon T3 will go offline for large-scale maintenance later this month—starting from 26 April according to Chevron’s schedule. If Chevron finds similar issues to those found at its first two trains last year – the total works could last ~14 weeks until early August (based on T1 work timeline). ·Large-scale maintenance works scheduled at Ichthys, GLNG and North West Shelf in May. Planned maintenance at PNG LNG will reduce exports from Papua New Guinea in May, although the exact timing of these works has not been officially announced Q3 21 gas balances to weaken relative to Q2 21 – on higher pipeline supplies Bearish factors ·Strong pipeline imports from Russia and central Asia will limit Chinese LNG demand growth y/y to 1.0 Mt over the same period. ·Nuclear availability is set to improve in Japan - translating to a drop of 1.1 Mt y/y between July–September. ·11.4 Mt y/y growth of global LNG supply in Q3 21—primarily from the US and Egypt—will far outpace the call from Asia-Pacific markets. · Constructive factors •European gas inventories replenished. • •Argentina expected to import 3 Mt (60-65 cargoes) this sumer of which only 1.7 Mt thus far tendered. They will have to secure another ~1.3 Mt of LNG (June-September). Through the Escobar terminal and Bahia Blanca FSRU terminal. • •India and Pakistan. ~ 1 Mtpa incremental of imports due to FSRU (HoeghGiant) and ExcelerateSequoia)

    11 min

  8. 16/04/2021

    China's carbon market: Emissions Trading Scheme to start in June 2021

    Update on China’s Emissions Trading Scheme: When trading starts in      June – prices for allowances are now expected to trade sub US$1.5/ton –      given the oversupply of allowances. Government officials and market      participants had previously expected trading to commence in the US$4.6 –      US$7.6/ton range. China’s ETS resembles      the first phase of the EU ETS where the program started with ample      allowances – with further regulatory reform needed to tighten the market. According to analysis by      Transitionzero, China has oversupplied its national emissions trading      scheme by as much as 1.56 billion allowances for 2019 and 2020. Regulators will have      issued around 10.51 billion allowances to coal-fired power plants for the      two years under the benchmark-based scheme, compared to an actual need of      some 8.94 billion. The surplus is bigger in 2020 (830 mln) than in 2019      (740 mln). For context: Cumulative      oversupply over its first two years of operation is on track to be the      equivalent of a year’s worth of EU ETS emissions. Replacing China’s coal      fleet with zero carbon alternatives could save $1.6 trillion or incur a      net-negative abatement cost of US$20/tCO2 according to analysis by      TransitionZero. China will have to halve      the carbon intensity of its power generation to 350 gCO2/kWh in 2030 from      672 g currently to be on track to meet its 2060 carbon neutral pledge.

    7 min
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The intention of macro crude is to give you a very simple view on key movers of the macro economy, the world of oil, politics. The intersection of what moves currency markets, key themes for stocks, bonds. And really understanding the world of finance - one day at a time - and in punchy audio sessions which are less than five minutes. We will publish charts on our twitter account that cover interesting themes across major markets - whether its a chart on oil inventories in China - or a chart on the unemployment rate in the US, vote counts and we will distill it into a fact based view - while connecting the dots for you in the world of finance. With the hope that this will be both a learning opportunity, invite a discussion and more importantly be a platform that sparks ideas and debate around key macro crude topics that impact our lives.

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