http://iopscience.iop.org/article/10.1088/1748-9326/aa54e8/meta;jsessionid=F7240F0DDAFCFB0789696F103BF9C5DB.c3.iopscience.cld.iop.org
LETTER • OPEN ACCESS Carbon dioxide removal and the futures market D'Maris Coffman and Andrew Lockley Published 23 January 2017 • © 2017 IOP Publishing Ltd Environmental Research Letters <http://iopscience.iop.org/journal/1748-9326> , Volume 12 <http://iopscience.iop.org/volume/1748-9326/12>,Number 1 <http://iopscience.iop.org/issue/1748-9326/12/1> Focus on Negative Emissions Scenarios and Technologies <http://iopscience.iop.org/1748-9326/focus/Negative%20Emissions%20Scenarios%20and%20Technologies> Abstract <http://iopscience.iop.org/1748-9326/focus/Negative%20Emissions%20Scenarios%20and%20Technologies> Futures contracts are exchange-traded financial instruments that enable parties to fix a price in advance, for later performance on a contract. Forward contracts also entail future settlement, but they are traded directly between two parties. Futures and forwards are used in commodities trading, as producers seek financial security when planning production. We discuss the potential use of futures contracts in Carbon Dioxide Removal (CDR) markets; concluding that they have one principal advantage (near-term price security to current polluters), and one principal disadvantage (a combination of high price volatility and high trade volume means contracts issued by the private sector may cause systemic economic risk). Accordingly, we note the potential for the development of futures markets in CDR, but urge caution about the prospects for market failure. In particular, we consider the use of regulated markets: to ensure contracts are more reliable, and that moral hazard is minimised. While regulation offers increased assurances, we identify major insufficiencies with this approach—finding it generally inadequate. In conclusion, we suggest that only governments can realistically support long-term CDR futures markets. We note existing long-term CDR plans by governments, and suggest the use of state-backed futures for supporting these assurances. -- You received this message because you are subscribed to the Google Groups "geoengineering" group. To unsubscribe from this group and stop receiving emails from it, send an email to geoengineering+unsubscr...@googlegroups.com. To post to this group, send email to geoengineering@googlegroups.com. Visit this group at https://groups.google.com/group/geoengineering. For more options, visit https://groups.google.com/d/optout.
