Commodities trader Trafigura opens carbon trading desk as it delves into global offset market

Published 14:43 on April 9, 2021  /  Last updated at 14:43 on April 9, 2021  /  Americas, Asia Pacific, Bavardage, EMEA, EU ETS, International, Other APAC, Shipping, Switzerland, US, Voluntary Market  /  No Comments

Commodities trader Trafigura has formally opened a carbon trading desk, the Singapore-headquartered firm announced Friday, as it ventures into the growing global offset market.

Commodities trader Trafigura has formally opened a carbon trading desk, the Singapore-headquartered firm announced Friday, as it ventures into the growing global offset market.

Trafigura said it has named its head of European crude oil trading Hannah Hauman as global head of carbon trading, and she will lead a dedicated team based in Geneva, Houston, and Singapore, with plans to recruit a number of additional roles.

“Regulated and voluntary carbon offset markets will have an important role to play in the progression towards a carbon neutral world for industries with emissions that cannot otherwise be eliminated or reduced through investment and operational optimisation,” the firm said in a press release.

Trafigura added that its entry into this burgeoning market will bring increased liquidity by connecting producers of offsets to its global network of oil, metals, and minerals customers, including producers and end-users.

The firm has already made a splash in the offset market this year, announcing last month that it was buying a carbon neutral shipment of 650,000 barrels of condensate from a group led by Australia’s Woodside Energy.

The transaction included a quantity of Gold Standard or VCS voluntary credits that were bundled with the cargo to neutralise the related emissions from extraction to consumption.

Even before this, Trafigura was no stranger to carbon trading, having participated in various compliance-based markets over the years, including the EU ETS.

It has also recently delved into the RGGI and California-linked WCI schemes in North America, opening registry accounts in both last year and building a team there that includes former Macquarie trader Tim Lott.

Participating in offset markets will likely help Trafigura achieve its own emissions reduction targets, with the company earlier this year setting itself goals to cut its scope 1 and 2 emissions by at least 30% under 2020 levels by the end of its 2023 financial year.

The firm’s full-scope output was 13.48 million tonnes of CO2e in 2020 – up 20% from 2019 – while its scope 1 and 2 emissions were 3.48 Mt.

It intends to set a scope 3 emissions target by the end of its FY 2023 and to install 2 GW of renewable power generation capacity by the end of its FY 2025 via its Nala Renewables joint venture, it announced in January, with offsets set to play a “smaller part” in its overall climate strategy.

As one of the world’s largest charterers, responsible for over 4,000 voyages annually, shipping accounts for 58% of Trafigura’s full scope emissions.

Last year, Trafigura suggested that the UN shipping agency IMO introduce a carbon levy of between $250-300/tonne of CO2e on shipping fuels, in order to make zero- and low-carbon fuels more competitive.

By Mike Szabo – mike@carbon-pulse.com

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