June 2, 2010 / 12:34 PM / 9 years ago

FACTBOX: Investment bank activity in carbon trading

LONDON (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 said on Wednesday it had agreed a 98 million pound ($142.4 million) cash offer for Swedish carbon developer Tricorona, becoming the latest major bank to invest in the growing sector.

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

Bank of America Merrill Lynch

* 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

* 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


* equity investment in Sindicatum Carbon Capital

* proprietary trading

Deutsche Bank

* 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

* investor in NYMEX’s Green Exchange

* investor in project developer Blue Source

JP Morgan

* Bought carbon offset developer EcoSecurities 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

* equity investor in project developer MGM

* proprietary and client trading


* some proprietary trade and carbon offset investing

Societe Generale

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

* orbeo bought CDM project developers OneCarbon

* Socgen markets Rhodia’s CDM carbon offsets

* manages SGI Global Carbon Index

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

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