Cap & Trade
The incorporation of financial markets distinctly supports and accelerates the purely regulatory implementation of the Kyoto goals. Financial intermediaries occupy an important interface in the whole supply chain of emissions trading. This occurs foremost when needed capital is made available or procured for emissions trading. Their role is to steer streams of capital for deployment in climate friendly and energy efficient technologies. Lastly financial services help so that climate protection projects can be financed and realised and that environemtally friendly technologies can be promoted. With new financial products, financial intermediaries enable their customers to invest in emissions trading credits, environmentally friendly technologies or climate protection projects, and in so doing, are able to make a contribution to climate protection.
Climate relevant financial instruments generate market-based stimuli for
- a strong bias for sustainable investments,
- the financing of technological innovations as well as prevention and conservation projects,
- the development of new instruments for hedging and diversifying from unavoidable climate risks and
- a stronger and systematic utilitsation of a new investment class with attractive risk premiums and minimal correlations to traditional investments.
Emissions trading is already a billion euro market and will continue to increase many times over through a consequent continuation of breakthrough climate policies and the incorporation of further branches and the most important, non-member countries. Market experts believe the emissions trading market is capable of reaching a worldwide trade volume of up to USD 3 trillion by the year 2020. For financial services, there is growing hope of a new growth market.