Corporates falling under the European Commission's emission energy trading scheme may increase their use of weather derivatives, Claire Byers, emissions trader at Fortis Bank in Rotterdam, told delegates. Fortis Bank is looking at pricing cross-commodity products linked to both weather and emissions. There is not sufficient liquidity in either market for this yet, said Byers, who expects these types of instruments to be structured toward the end of next year.
"Weather is probably the most significant variable that affects carbon dioxide emissions," according to Byers. Rain and wind levels increase capacity of alternative energy generators, she explained, while hot summers increase demand for cooling and cold winters increase demand for heating.
