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By Gerard Sanz, Relationship Manager, Man Investments, Pfäffikon, Switzerland
No-one today disputes that global warming comes mainly from man-made greenhouse gases. Trading in carbon certificates, which is aimed at reducing emissions, is a promising approach, and this new market provides hedge fund managers with attractive earnings opportunities.
According to the Intergovernmental Panel on Climate Change (IPCC), it is “very likely” that global warming in the last 50 years was essentially due to emissions of greenhouse gases from human activities, CO2 in particular.
Its report, published in February 2007, lent support to the European system of trading carbon emissions permits, which had its roots in the Kyoto Protocol. This treaty, which came into force in 2005 and runs until 2012, sets restrictive targets for greenhouse gas output for the first time. Between 2008 and 2012, industrialised countries are supposed to reduce emissions by 5.2% on average versus 1990 levels. In the European Union, the intention is to cut overall emissions by 8% in total.
To achieve this 8% reduction target, the EU is adopting a new approach. Lower carbon emissions will come not from regulations or sanctions, nor from compensation schemes, but from a new artificial price mechanism: the carbon permit trading system.
The system works by distributing pollution rights to the biggest carbon emitters in the form of emissions certificates, with a view to reducing certifica...................... To view our full article Click here
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