Good question, zuniga60. There is a place for banks in the carbon market. They have participated by purchasing carbon credits from companies that have reduced their carbon production. By purchasing carbon credits, banks help to maintain the incentive for companies to reduce their pollution. Despite some banks retracting their interest in the carbon market after 2012, certain banks are still involved, so it would seem like there is a place for banks in the carbon market after all.
Hope this helps!
Banks definitely have a place in the carbon markets, and that space will only grow as the industry evolves–currently carbon is a $60 billion market.
Banks see opportunity and are attempting to gain exposure to this market in a number of different way. Merrill Lynch recently launched a new Carbon-Market Index aimed at giving all investors the chance the carbon market, and JP Morgan has plans to acquire ClimateCare, a British company that builds clean energy projects in the developing world in an effort to offset carbon emissions elsewhere. With a ton of carbon emissions currently trading on Europe’s emission market for $30, ClimateCare is looking at a profitable future considering they can provide independently verified offsets for about $15 per ton.
Overall, I would expect banks to only become more involved in the carbon market as the industry matures and new creative ways to rake in profits become available.
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