Here's a great opening paragraph, from CNBC:
At a recent biomass conference in San Francisco, one institutional investor with capital exposure to carbon transactions lamented the “crowds of unemployed bankers” roaming around looking to create carbon “deals” and launch funds based on credits that have a tenuous value.
“Even the people trading carbon since it’s been around don’t know what they’re doing,” he said. “It’s a lot of risk to take in.”......Though private equity and hedge funds have already begun placing their bets in the carbon space, its unclear at this point whether the old investment models are best suited to play a market that could hit $2 trillion in a few years times.
At this point. private funds are “emerging as the method of choice” for access, says Scott Furman, head of the environmental law group at the New York-based firm of Tannenbaum Helpern Syracuse and Hirschtritt, because it "enables the investor to share risk, diversify and rely on professional management,” he says.
The ideal carbon fund structure, however, may borrow some aspects from both private equity and hedge funds, creating a hybrid that could require some rethinking of asset allocation models that typically divide alternatives managers into private equity, real estate or hedge fund portfolios....MORE