DBS launches financing, hedging solutions for EU ETS climate obligations

EU ETS is the world’s first carbon emissions trading scheme.

DBS has unveiled a suite of financing and hedging solutions, aimed at helping companies manage their climate obligations under the European Union Emissions Trading System (EU ETS).

The solutions reportedly enable stable and cost-effective access to emission allowances used in the EU ETS, also known as EU Allowances (EUAs), DBS said in a press release.

These are structured under DBS’ emissions reduction business, a unit within the bank’s global financial markets group. The unit has two priorities: financing, or providing working capital solutions for DBS clients with EUA inventories; and hedging, or strategies to help companies manage financial risk associated with EUA inventories

The EU ETS is the world’s first carbon emissions trading scheme, with the aim of incentivising the adoption of low-carbon technologies, according to DBS.

An annual limit is set for the amount of carbon emissions that can be emitted by energy-intensive industries. This cap is reduced every year.

Companies under the scheme must have an allowance, or EUA, for every tonne of carbon they emit— or face a fine.

In 2024, the system was extended to include shipping emissions from companies outside of the EU. Large vessels sailing to and from ports in the union will need allowances to cover half their carbon emissions.

These obligations place significant working capital requirements on companies, DBS said.

DBS’ emissions reduction business was set up to deliver solutions to help companies manage emerging risks associated with compliance with carbon markets, and meet their climate obligations.