Commodity trading, which is the buying, selling, and exchanging of raw materials related to oil, gas, metals, and agricultural products, is among the industries which are most impacted by changes in climate. As the environment changes, so does the commodity trading jobs landscape.
Which Climate Change Factors Affect These Jobs The Most?
Factors such as changes in regulations, weather patterns and consumer demands have been the main influencers when it comes to climate change affecting commodity trading jobs. These have resulted in both opportunities and challenges for the industry.
Fossil Fuel Demand Has Decreased
It’s not uncommon for some governments to introduce subsidies for using renewable energy and carbon pricing. As a result, the demand for traditional resources such as coal and oil has significantly decreased. Several countries have increased their efforts to reduce their carbon emissions, retire coal plants, and invest in renewable infrastructure. This has reduced demand for fossil fuels and increased price volatility.
For oil, coal, and natural gas traders, this decline has presented challenges. A number of energy traders may well have to begin to diversify their portfolios and seek out opportunities in the alternative energy markets.
Changes In Weather Can Cause Disruptions
Climate change has increased the frequency and severity of extreme events, with increased incidences of hurricanes, drought, floods, and heat waves. This heightened frequency introduces volatility in the supply of commodities, especially agricultural and energy sectors.
This is where commodity traders must become increasingly adept at managing the rising unpredictability. It becomes crucial that they have a thorough understanding of environmental data and what it means.
Commodity Prices Can Be Vulnerable
Climate change can result in sudden changes to basic resource supplies. This could involve increased water shortages in countries that supply agricultural products or minerals, thereby reducing supply and increasing the price of those commodities. Conversely, technological advances and the switch to alternative energy sources, driven by climate-related factors, would serve to reduce the demand for certain types of fossil fuel and therefore reduce the price of oil and gas.
The Focus Has Shifted To Renewable Energy Sources
Wind, solar, and hydroelectricity represent emerging sources of renewable energy. The commodities associated with them, such as lithium for batteries, rare earth metals for turbines, and silicon for solar panels, have become increasingly valuable over time. Traders in these areas need to understand the technical and geopolitical dynamics behind the sourcing and production of these materials.
Commodities Should Be Sustainably Sourced
Consumers and governments are under more pressure to source commodities sustainably. This has resulted in an increased demand for traders who have the ability to review supply chains in terms of sustainability and ensure that they are compliant with new laws and regulations.