Global Carbon Market Heating Up
Carbon markets could see a significant boom in the next decade, especially if the U.S. gets involved. That’s according to a new report by Point Carbon. The group contends that global carbon markets could be worth nearly $3.14 trillion by 2020 if the U.S. introduces a greenhouse gas cap-and-trade scheme. The report also projects the U.S. could account for 67%, of the global market.
Looking ahead, carbon trading and financial jobs are expected to open up due to impending climate change legislation on Capitol Hill. Executive search firm, A.E. Feldman, says banks will be scouring the global talent pool for qualified candidates in the growing carbon trading sector.
Global Carbon Market Booming
Carbon dioxide is one of the main greenhouse gases blamed for climate change. That’s where emissions trading schemes (ETS), or cap-and-trade schemes come in. Under a “cap-and-trade” system, the federal government would ration the amount of carbon dioxide and other greenhouse gases that businesses emit by issuing permits. A business wanting to emit more than it is allowed may buy the right to do so from a business that emits less than its entitlement. The global carbon market encourages investment in clean technologies as well as the buying of emissions rights from those with a surplus.
The carbon market is the most visible result of early regulatory efforts to mitigate climate change, according to the World Bank Carbon Finance Unit. The World Bank reports that last year alone an estimated $9.5 billion poured into 58 public and private funds that either purchase carbon directly or invest in projects and companies that can generate carbon assets. Moreover, the total capitalization of carbon vehicles could reach $13.8 billion in 2008, with 67 such carbon funds and facilities.
Point Carbon estimates that the country’s total transaction volume will be 38 billion tones of carbon dioxide equivalent per year by 2020. The scenario, however, is based on the assumption that a cap-and-trade scheme along the lines of the Lieberman-Warner Climate Security Act of 2008 will have been introduced in the U.S.
The Lieberman-Warner bill calls for capping carbon dioxide emissions from power plants, transportation and industrial sources with the goal of significantly reducing greenhouse gases. Under the proposed legislation, U.S. greenhouse gas emissions would drop by about 2% per year between 2012 and 2050, based on 2005 emission levels. The bill would cut total U.S. global warming emissions 66% by 2050. Senate Majority Leader Harry Reid has scheduled the bill for the first week in June, according to Reuters.
Investors Pushing for Climate Legislation
Investors managing more than $2.3 trillion are pushing for stricter laws to cut greenhouse gas emissions, according to Reuters. The report states that the group of roughly 50 investors (including the world’s biggest listed hedge fund firm, Man Group Plc and influential venture capitalist John Doerr) believes lax regulation could hurt the competitiveness of U.S. companies.
The group of investors wants U.S. lawmakers to pass legislation that will not only promote clean technologies on the scale needed to dramatically cut down pollution but also reduce climate-warming emissions by at least 60 to 90% by 2050.
