The information provided is not an offer to sell nor solicitation of an offer to buy any investment product.

Setting a new
standard in carbon investing.

SparkChange is a provider of specialist carbon investment products and data, serving global institutions and their clients.

All-in-One solution

Designed to accelerate global decarbonisation.

SparkChange’s products provide investors with exposure to physical carbon allowances without the complex and costly infrastructure needed to access each market and take delivery of the carbon allowances.

Our data and analytics platform enables investors to design and implement custom strategies that help deliver their decarbonisation goals.

Our combined solution makes it easy to invest in carbon markets – more investors with access can create a bigger environmental impact.

*For illustrative purposes of data platform

Carbon allowances: The basics

Incentivising CO2
reduction.

To cap US emissions, California regulators force industrial firms to obtain “permits to pollute”, called carbon allowances or CCAs.

1 carbon allowance ⇒ 1 tonne of CO2

Under a Cap-and-Trade system, industrial firms that emit CO2 must obtain Carbon Emission Allowances from regulators – each allowance permits them to emit 1 tonne of CO2

Supply of allowances is reduced annually

Legislation automatically reduces the supply of allowances each year, decreasing emissions over time and increasing scarcity value of allowances

Incentivises polluters to reduce emissions

An increase in the price of allowances forces firms to switch to greener solutions and reduce their greenhouse gas emissions

1 Data from ICIS as of 31st July 2021
2 Analysts’ high-low forecasts compiled by Carbon Pulse

Why carbon is of
interest today.

As of July 2021, the price of California carbon allowances (CCAs) was $19.30 per tonne of CO2.1 In light of the clean energy transition, tightening emissions regulation may provide a positive catalyst for the performance of the carbon market. To control price, California also includes an Auction Reserve Price which started at $10 per tonne in 2012 and increases 5% annually plus inflation, providing a measure of downside protection.2

*Past performance is not indicative of future results

*Past performance is not indicative of future results

1 Data from ICIS as of 31st July 2021
2 Analysts’ high-low forecasts compiled by Carbon Pulse

Use cases

How SparkChange can aid investment strategies.

As a standalone investment

Capture investment
returns

Since the supply of carbon allowances is diminishing, their scarcity value is increasing, creating potential for an attractive returns profile.

Improve impact

CCAs are an asset that produce a positive environmental impact and can be re-sold; Unlike offsets, which have no resale value once used and (mostly) do not reduce emissions.

Blended as part of a portfolio

Hedge risk

Given most portfolios are short the carbon price already, investors can neutralise their exposure to a rising carbon price.

Qualify for ESG
standards

Combine with equity or fixed income structures to qualify for ESG standards such as the EU Climate Transition Benchmark or Paris-Aligned Benchmark.

Advanced Decarbonisation Analytics

Create your carbon
management strategy.

Upload a portfolio to analyse how its carbon footprint develops over time by scope, sector and region.

Set your desired climate goal from a range of ESG benchmarks including IPCC 1.5°/2° pathways, TCFDs Paris Aligned Benchmark rules or balance your entire footprint.

Review and apply bespoke carbon alignment strategies required to achieve your net zero goal.

Technology Platform

Designed to simplify
investing in carbon instruments.

Platform’s products provide direct exposure to the
value of physical carbon emission allowance[2]

Suitable for qualified institutional and individual
investors seeking exposure to carbon allowances

Removes the complex and costly set-up requirements needed to access the market directly and take delivery of physical carbon allowances

+ Simplifies access to WCI carbon market

+ Issued securities mirror the liquidity of carbon allowances

Learning centre

Frequently Asked Questions.

Want to know more about the carbon markets or what we do? Check out our most frequently asked questions.

If you still can’t find what you’re looking for just get in contact with us at us@sparkchange.io.

Want to know more about the carbon markets or what we do? Check out our most frequently asked questions. If you still can’t find what you’re looking for just get in contact with us at us@sparkchange.io.

Both carbon allowances and offsets have merits and important roles to play to make the world a better place. However, offset schemes are voluntary and uncapped, and therefore do not necessarily create a reduction in emissions. In addition, Allowance markets are full regulated and allowances themselves are fungible, whereas offset schemes vary widely in quality and impact.

Key price drivers are the supply and demand for carbon allowances as well as a pre-defined auction floor price.

Emissions are the main driver of demand, with the transport sector accounting for nearly half of California’s annual emissions. Mid-term price developments are often closely linked to economic development. The implementation of carbon reduction policies, such as renewable portfolio standards and incentive programs to support the move to Zero Emission Vehicles defined demand for allowances in the long-term.

The supply of allowances is set in line with long-term emission reduction goals in the form of an annual cap. The underlying legislation is proposed by the CARB and put into law through the Californian legislative process. Over the last years, California has continuously increased its climate change ambitions.

The auction floor price for CCAs ($17.71 in 2021 (Source: CARB) provides a soft lower boundary for CCA prices, it’s yearly increase has been driving CCA prices upwards since the inception of the program.

The annual auction reserve price for the Californian cap-and trade program is set by the regulator to provide a strong, dependable price signal to the market and manage supply in phases of lower demand. It is the minimum price set at each quarterly auction: if bidding volume at or above this price stays below offered volume, the auction does not sell out, reducing supply to the market.

The floor price was set at $10 in 2012 and increases by 5% + inflation annually. In 2021, the floor price is $17.71. (Source: CARB)

Insights & News

Californian Carbon Allowance market ripe for impact investors

With investors helping to set record prices, the California carbon allowance market has burst…

Continue

Investing in markets Vs. investing in technology

The fight against climate change requires technological innovation; this is incontestable. The world must…

Continue

Leaders’ Summit on Climate: good news, but still not enough

As major emitters announce new emissions-cutting pledges, the numbers confirm we are still far…

Continue

The Rise of Impact investing: SparkChange’s role in boosting climate ambition

A summary of the mechanisms that can help drive scarcity value within the EU…

Continue

Investors & Partners

Investors & Partners Logo
Investors & Partners Logo
Investors & Partners Logo
Investors & Partners Logo
Investors & Partners Logo