Tuesday, December 18, 2007

Australian Pension Funds May Lead Carbon Investments, Bank Says

From Bloomberg:

Australian pension funds may be among the first in the country to invest in international carbon markets and commit to buying emissions credits from overseas projects, Credit Suisse Group's head of carbon trading said.

Pension funds are examining investments in the carbon market to broaden their portfolios, partly driven by a trend away from credit market investments, New York-based Paul Ezekiel said today in an interview in Sydney. Utilities such as AGL Energy Ltd. and Origin Energy Ltd. that will be obliged to cut their emissions will probably also be early investors, he said.

The global market for emissions credits may double this year to as much as $70 billion, the International Emissions Trading Association said last week. Australia's new Labor Prime Minister Kevin Rudd on Dec. 3 signed the documents to ratify the Kyoto Protocol, committing the nation to binding targets to limit gases blamed for global warming.

``We have had discussions with some investors who are clearly looking at this asset class for the first time, because they are now saying they need to broaden their exposure a little bit,'' Ezekiel said.

...Widening losses in credit markets may be helping to drive interest in carbon investments, Ezekiel said.

``You're also seeing a little bit of accelerated interest in this market because of what you've seen in the credit markets more broadly,'' he said.

``You're seeing some sectors fall out of favor here, and will be for some time, so people are looking to broaden and diversify their exposure to other markets. I wouldn't say it's broad but I think we're at the front end of that.''>>>MORE