The Project
Climate, energy transition, and net-zero targets are top of mind with the public and energy company leaders globally. Central planners & regulators worldwide are in various stages of designing & rolling out carbon markets as a tool aimed at climate change. In places where voluntary and/or mandatory markets are in place, Essentia’s commodity trading clients are responding, entering, and searching for opportunities to profit.
For a global, capital markets commodity trader entering carbon trading, Essentia assisted the client with both strategy consulting, as well as technology implementation. For the former, Essentia provided pre-requisite research and planning in preparation for the clients’ entry into carbon market trading. Additionally, Essentia assisted with the carbon market application and registration process for the targeted markets.
In technology, the client already had existing investments in Ion’s OpenLink trading platform. The OpenLink system, however, was not setup for the unique needs of carbon trading. The client needed deal-to-cash capabilities to support its expansion into carbon markets; this included capabilities for deal capture, valuation, real-time reporting on its carbon positions, insight into risk exposures by market, and visibility into profit and loss to ensure optimal trading decisions. Modifications were needed as soon as possible.
Essentia Deploys OpenLink
Utilizing native, out-of-box OpenLink instruments and other standard features, Essentia modeled a deal-to-cash trade flow aligned to carbon market processes. Essentia’s OpenLink experts configured deal capture, and setup pricing structures, which provided efficiency in marking across aggregated groups, including an ability to mark at the granular level required. Also, trade and inventory management utilities, which provide clarity and controls, were configured as well as custom dashboards were designed and deployed.
To ensure maximum user adoption and return on the investments in the platform, Essentia also documented and trained front office and support personnel on carbon market concepts, operational flows, and daily usage of the OpenLink system to support the business.
Client Benefits
By maximizing the usage of standard, out-of-box OpenLink features, Essentia avoided the concerns commonly associated with “system customization”. A further benefit was time to deployment goals were met as necessary to meet the business imperatives for rollout.
The success of this OpenLink deployment provided a foundation for subsequent phases, which have included the deployment of OpenLink for other commodities in line with the clients’ front office expansion plans.
By ensuring the business had the capabilities it needs to mitigate risks and optimize profitability, Essentia’s client is well-positioned to capture opportunities in carbon trading and also support its client’s efforts to reduce emissions.
Industry
Downstream
Commodities
Carbon
Technologies Deployed
OpenLink
Essentia Solution Offerings
Strategic Advisory & Planning
CTRM Implementation
Super User Support
