OI18: The Carbon Trade, Without the Illusion ft. Mike Azlen

Top Traders Unplugged

Niels Kaastrup-Larsen

Business, Business News, Investing, News

4.8 • 670 Ratings

🗓️ 27 August 2025

⏱️ 48 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

Mike Azlen joins Moritz Seibert for a frank look at carbon markets, and why much of what passes for climate action may be making things worse. While offsets dominate headlines, it's the regulated markets that deliver real emissions cuts by design, not intention. They unpack how cap-and-trade channels profit into abatement, why moral hazard plagues the voluntary space, and where long-only investors can find a real risk premium. From structural inefficiencies to measurable impact, this is a conversation about aligning incentives with outcomes - in a market where price isn’t just a signal, but a lever.

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Episode TimeStamps:

02:14 - Introduction to Mike Azlen

04:00 - What are Carbon Markets and how do they function?

13:32 - How Carbon Markets work in different countries

16:35 - The complexities of carbon offsets - viable or just a scam?

21:58 - Is Carbon Capture a viable solution to the climate crisis?

25:44 - Why is there a risk premium in compliance carbon markets?

29:31 - The difference between spot and physical permits

32:35 - Why is the funding premium so large in California?

33:49 - The investment philosophy behind Carbon Cap Management

36:56 - It's all in the EUAs

40:50 - The positive impact of Carbon Cap Management

45:39 - Wrapping up

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Transcript

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0:00.0	I think at a systems level, very logically, you can make a very strong argument that the voluntary carbon market in its current format is actually exacerbating climate change.
0:18.0	I think the key word in the voluntary market is the key words,
0:23.3	moral hazard. Moral hazard looms large. There have been project after project, there have been
0:30.9	scandal after scandal and a lot of legal things. And our advice very strongly to clients is to avoid any involvement in
0:40.7	the voluntary market until it becomes under proper financial regulation.
0:47.9	Imagine spending an hour with the world's greatest traders.
0:51.8	Imagine learning from their experiences, their successes,
0:54.6	and their failures. Imagine no more. Welcome to Top Traders Unplugged, the place where you can
1:01.6	learn from the best hedge fund managers in the world so you can take your manager, due diligence,
1:06.5	or investment career to the next level. Before we begin today's conversation,
1:12.6	remember to keep two things in mind.
1:16.4	All the discussion we'll have about investment performance is about the past,
1:21.2	and past performance does not guarantee or even infer anything about future performance.
1:25.4	Also understand that there's a significant risk of financial loss with all investment strategies, and you need to request and understand
1:28.3	the specific risks from the investment manager about their product before you make investment
1:32.7	decisions. Here's your host, veteran hedge fund manager, Niels Kostrup Larson.
1:38.5	Welcome to another episode in the Open Interest series on Top Traders on Block, hosted by Moritz-Sebert.
1:44.7	In life, as well as in trading, maintaining a spirit of curiosity and open-mindedness is key,
1:51.1	and this is precisely what the Open Interest Series is all about.
1:55.4	Join Moritz as he engages in candid conversations with seasoned professionals
1:59.8	from around the globe to uncover
2:02.1	their insights, successes and failures, offering you a unique perspective on the investment landscape.
	...

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