| Author: | Pang, Yik Chung |
| Title: | Research on price movement of nature-based global emissions offset futures |
| Advisors: | Wei, Hsi Hsien (BRE) |
| Degree: | DIREC |
| Year: | 2024 |
| Department: | Department of Building and Real Estate |
| Pages: | xi, 251 pages : color illustrations |
| Language: | English |
| Abstract: | The construction industry sees annual spending of around USD 11 trillion, but also contributes significantly to carbon emissions, accounting for 37% globally, surpassing even the transportation sector. In response, the EU will implement the EU ETS II for road transport and buildings starting in 2027. Besides, the UK's Biodiversity Net Gain requirements will take effect in 2024, necessitating a 10% improvement in biodiversity for new development projects. Property developers will also need to disclose nature-related exposure under regulations like TNFD, prompting investments in nature conservation to mitigate reputational risks. Similar to the aviation sector, the real estate industry is expected to adopt measures to reduce carbon emissions and promote nature conservation projects. Paulson Institute estimates that an annual investment of USD 722 billion to USD 996 billion is needed to prevent biodiversity decline / loss. The introduction of TNFD in September 2023 is expected to prompt companies to step up their efforts in addressing the biodiversity financing gap. The biodiversity credit market is seen as a way to secure funding for nature conservation projects and align with Global Biodiversity Framework and Paris Agreement, leading to an anticipated rise in demand for nature-based instruments such as biodiversity credits and Nature-based Global Emissions Offset futures (“N-GEO futures”). However, there is currently a lack of research on biodiversity credits, co-benefit credits, and Nature-based Global Emissions Offset futures. This study aims to establish pricing relationships for Nature-based Global Emissions Offset futures, making a significant theoretical contribution to the field. The research outcomes could enhance existing knowledge and provide an analytical framework for companies to forecast changes in the prices of N-GEO futures. In countries like the UK, property developers are required to obtain biodiversity credits and other qualifying nature-based instruments for their projects, so the practical implications of this study could be valuable for property developers seeking to fulfil their Net Zero and Biodiversity Net Gain commitments in the future. The research examined the relationship between N-GEO futures and some major important factors such as macroeconomic growth, investment sentiment, interest rates, environmental awareness, and the airline industry. Regression analysis highlighted the impact of these factors on N-GEO futures prices, with variables like US and world GDP growth, equity performance, environmental awareness, and airline industry showing strong correlations. However, the current trading volume of N-GEO futures is characterized by thin market activity. The study demonstrated the complex interplay of various factors influencing N-GEO futures prices, emphasizing the need for further research in this area. With only a brief 2.5-year history, conducting time series analysis is currently not meaningful. As the market matures, rigorous time series analysis will be essential for understanding factors like seasonality and autoregression for better forecasting accuracy. As more industries become involved, a detailed examination of how different sectors affect N-GEO futures will be necessary. It is crucial to remain vigilant and adapt to regulatory changes and industry developments to ensure the model's validity in the face of evolving dynamics. |
| Rights: | All rights reserved |
| Access: | restricted access |
Files in This Item:
| File | Description | Size | Format | |
|---|---|---|---|---|
| 7627.pdf | For All Users (off-campus access for PolyU Staff & Students only) | 7.44 MB | Adobe PDF | View/Open |
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