• Carbon Market Transactions
  • April 28, 2009 | Author: Dickson C. Chin
  • Law Firm: Jones Day - New York Office
  • The transition to a low-carbon economy seems likely, if not inevitable, in the years ahead. Under the existing Kyoto Protocol to the U.N. Framework Convention on Climate Change, Europe already has in place legally binding commitments to reduce greenhouse gas emissions. At the same time, the Obama Administration is actively promoting renewable energy and infrastructure, and it is prodding Congress to pass climate change legislation. Collectively, these initiatives encompass four of the main buckets of investment opportunities in a low-carbon economy:

    • Low-carbon energy (e.g., renewable energy and biofuels);
    • Infrastructure support (e.g., power transmission and manufacturing);
    • Carbon trading (e.g., emission "cap and trade" programs); and
    • Emission offset projects (e.g., the Kyoto Protocol's Clean Development Mechanism).

    The investment demand to support these initiatives will be substantial. Several studies point to an annual minimum of $500 billion over several decades. Investors will face an array of choices in placing their bets. With the major economies of the world facing seismic changes, an interdisciplinary approach to monitoring the broad spectrum of legal and commercial developments in climate change will help investors to maximize these opportunities.