Growing concerns about the environment were seen as early as 1990, when rapid industrialization in many countries generated rampant pollution and environmental degradation. At that time, the United Nations began working to reign in pollution and set greenhouse gas limits, and in 2005 the Kyoto Protocol was adopted to required countries to decrease greenhouse gas emissions. A new commodity market was born, the market for greenhouse emissions. Across North America and Europe, new instruments were created to encourage the development and trade of green energy through the form of renewable energy certificates (RECs).
Companies have several options to reduce greenhouse emissions. They can adopt sources of renewable energy such as solar, wind, and hydropower. They can improve operational efficiency, decreasing production of carbon, or make their infrastructure more energy efficient. Some companies choose to continue producing the same level of greenhouse gases by purchasing the right to produce more pollutants from companies that have invested heavily in emission reduction programs, such as reforestation, solar farms, methane capture, and other offset programs.
Exchanging renewable energy certificates is a cost-effective way to reduce greenhouse gases globally and provides new financial resources to companies adopting clean energy technologies. More efficient power plants can trade emissions credits for cash, as can agriculture, mining, manufacturing, and other businesses that have successfully invested in significantly reducing emissions.
Environmental markets are highly complex with an array of products scattered across various registries, each with its own jurisdictional nuances. For example, in North America the carbon market is voluntary and loosely organized (with the exception of California and parts of Canada), but Europe has developed a highly sophisticated mandatory carbon compliance market. Each environmental market consists of digitized certificates with unique serial IDs and regulatory policies that mandate retirement targets of these certificates, whether they are RECs, RINs, water credits, and emission credits in North America or EU allowances (EUAs), ROCs, or GOOs in Europe.
Eka has expanded our energy trading and risk management software (ETRM) to manage all environmental products and track, with absolute precision, the registry inventory on a one-to-one serial ID basis. Eka’s ETRM software for green energy leverages Eka’s existing ETRM architecture to manage transaction capture, position reporting, and settlement, ensuring that all traders are fully compliant with Renewable Portfolio Standards.
Eka’s ETRM software is a fully integrated multi-commodity software platform for crude and refined products, natural gas, natural gas liquids (NGL), liquefied natural gas (LNG), power, coal, and biofuels covering all aspects of a transaction lifecycle including trading, risk management, processing, scheduling, logistics, and accounting. Eka's Commodity Analytics Cloud seamlessly integrates with our ETRM solution, providing predictive analytics, visualization, and optimization to enable better, faster, smarter decisions.