Friday, June 4, 2010

"Investment bank activity in carbon trading" (BAC; C; GS)

From Reuters:
Investment banks are chasing opportunities in a $144 billion carbon market as the U.S. Senate considers a federal climate bill that would launch a cap and trade scheme.
Governments worldwide are also expected to lean heavily on the private sector and carbon markets in particular as a way to raise finance to fight climate change.
Investment banks have three main strategies in the carbon market: buying and selling emissions rights on behalf of corporate clients to profit from bid-offer spreads; proprietary trading with their own money; and investment in carbon offset development under the Kyoto Protocol's clean development mechanism (CDM).
In the last category, Barclays PLC (BARC.L) said on Wednesday it had agreed a 98 million pound ($142.4 million) cash offer for Swedish carbon developer Tricorona (TRIC.ST), becoming the latest major bank to invest in the growing sector. [ID:nLDE651093]
Following is a list of some of the more active banks, and what they do --

Bank of America Merrill Lynch (BAC.N)
* forest protection carbon project origination (REDD)
* structuring and investment in voluntary carbon markets
* green principal investment and private equity
* investor in Danish offsetter Core Carbon Group

Barclays Capital (BARC.L)
* market maker for clients and through prop desk
* says has traded 2 billion tonnes of carbon allowances
* has no proprietary investment in carbon commodities
* research and structuring teams
* agreed 98 million pound cash offer for Tricorona

We had also linked to Reuters Sep 15, '09 "Factbox":