In this feature Tanja Havemann, director of Beyond Carbon shares why despite the credit crisis, inconclusive Copenhagen and Cancun Kyoto Protocol talks and the scandals that affected the carbon market earlier this year, she still sees investment opportunities and, why shifting toward implementing regional schemes (fragmentation in markets) as opposed to waiting for global consensus on regulation has its advantages...
Listen to the complete feature Despite the odds why investors should consider/continue to invest in carbon markets
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A brief overview of how carbon markets function and the status quo.
The biggest ‘carbon market’ exists within the EU - the credits that are traded are ERUs (Emission Reduction Units), EUAs (EU Allowances) and CERs (Certified Emission Reductions).
Two of these are created by 'projects' (i.e. result in offsets) - those are ERUs and CERs and EUAs are allocations.
EUAs generally trade at a premium
How have carbon markets evolved through the credit crisis, the inconclusive Copenhagen Cancun talks and the high profile scandals that inflicted the space earlier this?
Why should investors consider or continue to allocate to carbon markets?
Given that the current trading value of one carbon credit, the equivalent of one metric ton of CO2 emission is still considered by many market followers as not being high enough - is this a deterrent?
It does not seem to discourage polluters to reduce their emissions.
The relevance of price formation/ establishing a floor
Although trading carbon credits- trading carbon as a commodity, has been around for some time now - how investable is it and how can investors access these markets - via trading platforms/funds/indexed products?
What in your opinion are the challenges and opportunities that lie ahead?
Comments on the trend toward fragmentation, rather than complete abandonment.