When JP Morgan Chase & Company puts in a bid of $204 million for EcoSecurities, developer, supplier and trader of emissions reductions, you know the carbon market is about to take off. There have to be dozens of vendors who are now out there on the market touting their carbon footprint and carbon management applications. There are lots of different angles, so it's often now easy to tell the players without a scorecard. We've been taking a look at a specific part of the market - emissio
We've been waiting for energy trading and risk management (ETRM) vendors to go beyond configuring their deal capture to handle carbon futures. While the environmental health and safety (EH&S) vendors have done a good job of reporting and inventory, we had yet to see anything that could handle a wide range of capabilities around trading certificates. Last week, we saw an impressive demonstration of a new product offering by Allegro called Emissions 8.1. The application covers the traditional functions of deal capture, risk management and settlement, but with very specific functionality that applies to trading emissions or renewable energy credits. Probably the two most notable features of the application are the ability to track and manage emissions certificates and have visibility into position.
For tracking and management, the application provides tracking capability for single or multi-year certificates, vintage, and exchange and covers surrender of allocations, and expiration of certificates. All this can be viewed from the user interface of Allegro's ETRM.
Position reports allow the user to view position across the trading process as certificates transfer. The application also supports market to market and valuation for a company wanting to use forward curves developed for emissions. Another nice feature is more on the accounting side of things. There is a reconciliation feature which matches the exchanges records against internal records to catch any discrepancies.
At this point, the application is geared towards utilities and generators, based on estimated emissions from planned and actual production. Still, in the future, oil and gas companies, especially refineries will want this type of capability as well. We are anxiously awaiting the first implementations of Emissions 8.1 to see how it performs in various markets.
Any other vendors out there with a similar solution?