June 2, 2010 / 8:32 AM / in 8 years

FACTBOX-Investment bank activity in carbon trading

(Updates factbox from Sept 15, 2009)

LONDON, June 2 (Reuters) - Investment banks are chasing opportunities in a $144 billion carbon market as the U.S. Senate considers a federal climate bill that would launch a cap and trade scheme.

Governments worldwide are also expected to lean heavily on the private sector and carbon markets in particular as a way to raise finance to fight climate change.

Investment banks have three main strategies in the carbon market: buying and selling emissions rights on behalf of corporate clients to profit from bid-offer spreads; proprietary trading with their own money; and investment in carbon offset development under the Kyoto Protocol’s clean development mechanism (CDM).

In the last category, Barclays PLC (BARC.L) said on Wednesday it had agreed a 98 million pound ($142.4 million) cash offer for Swedish carbon developer Tricorona TRIC.ST, becoming the latest major bank to invest in the growing sector. [ID:nLDE651093]

Following is a list of some of the more active banks, and what they do --

Bank of America Merrill Lynch (BAC.N)

* forest protection carbon project origination (REDD)

* structuring and investment in voluntary carbon markets

* green principal investment and private equity

* investor in Danish offsetter Core Carbon Group

Barclays Capital (BARC.L)

* market maker for clients and through prop desk

* says has traded 2 billion tonnes of carbon allowances

* has no proprietary investment in carbon commodities

* research and structuring teams

* agreed 98 million pound cash offer for Tricorona

Citi (C.N)

* equity investment in Sindicatum Carbon Capital

* proprietary trading

Deutsche Bank (DBKGn.DE)

* originates CDM and other carbon offset projects

* market makers in European carbon markets

* research team

Fortis Bank Netherlands

* provides project finance to CDM developers in combination with purchasing credits

* market maker in European cap and trade scheme

Goldman Sachs (GS.N)

* investor in NYMEX’s Green Exchange

* investor in project developer Blue Source

    JP Morgan (JPM.N)

    * Bought carbon offset developer EcoSecurities ECO.L for 129 million pounds last year

    * equity investor in Climate Care

    * originates CDM projects under wider climate business

    * market maker in European carbon trading

    Morgan Stanley (MS.N)

    * equity investor in project developer MGM

    * proprietary and client trading

    Nomura (8604.T)

    * some proprietary trade and carbon offset investing

    Societe Generale (SOGN.PA)

    * co-owns, with chemical firm Rhodia RHA.PA, CDM project developer orbeo

    * orbeo bought CDM project developers OneCarbon

    * Socgen markets Rhodia’s CDM carbon offsets

    * manages SGI Global Carbon Index .SGIXOCCT

    Reporting by Nina Chestney, Gerard Wynn and Michael Szabo; Editing by Jane Baird

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