The Deutsche Bank’s Asset Management Division (DeAM) recently released a scientifically researched report which gives investors an analysis of climate change policies and shows risk factor to 109 countries, states and regions on key government mandates and supporting policy frameworks. This report provides DB’s investors a reference for policies that are being discussed at the “Climate Change Summit” in Copenhagen (Denmark).

The report [Global Climate Change Policy Tracker: An Investor’s Assessment (Climate Tracker)] includes model prepared by Columbia Climate Center researchers that estimates the impacts on carbon emissions of each of 270 major climate policies, and aggregates them at country, regional and global levels.

“What investors want is Transparency, Longevity and Certainty – “TLC” – in policy regimes to mobilize capital,” said Kevin Parker, Global Head of DeAM and member of Deutsche Bank’s Group Executive Committee. “Many major emitters such as the US and the UK do not have enough “TLC” in their policy frameworks. Our rankings show that China has a lower risk for climate change investors, as does Germany, but the research also shows that in order to avoid catastrophic climate change, all countries will have to do more to encourage investment.”

“Carbon markets may provide policy support to investors in the long term. However, for the foreseeable future, investors will be focused on mandates and incentives,” said Mark Fulton, Global Head of Climate Change Investment Research at DeAM. “We believe that appropriately-designed and budgeted feed-in tariffs have demonstrated their ability to deliver scale.”

© 2009, Sharath Bhaskar. All rights reserved. Do not republish.

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Author: Sharath Bhaskar (6 Articles)

Graduate Student with MS in Environmental Sciences from New Jersey Institute of Technology.

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    “What investors want is Transparency, Longevity and Certainty – “TLC” – in policy regimes to mobilize capital,” said Kevin Parker, Global Head of DeAM and member of Deutsche Bank’s Group Executive Committee. “Many major emitters such as the US and the UK do not have enough “TLC” in their policy frameworks. Our rankings show that China has a lower risk for climate change investors, as does Germany, but the research also shows that in order to avoid catastrophic climate change, all countries will have to do more to encourage investment.”

    We’re a bit away from an efficient marketplace to encourage investment.

    As indicated, part of the way that it’s being capitalized in is with carbon and carbon “credits.”

    “Institutional Investor explored some of the current deficiencies:

    “The U.S. has dipped its toe into cap-and-trade — the country is speckled with a patchwork of voluntary systems (the Chicago Climate Exchange) and regional schemes (the Regional Greenhouse Gas Initiative) that are similar to the EU ETS. The absence of a federally regulated system in the U.S. gives rise to political uncertainty, which adds to the volatility of carbon prices and creates gaps in the pricing of carbon credits from area to area and exchange to exchange.

    The result? The U.S. carbon market is wildly inefficient, and savvy traders have been quick to exploit the gaps, pocketing windfalls in the process. Hellerman, who co-founded New York hedge fund Clinton Group in 1991 and started Wood Creek in 2005, says this inefficiency is its main allure. “We’re treating it like a new commodities market and being very opportunistic about relative-value trades,” he says — in other words, mining carbon’s volatility and mispricings for profit.”

    http://www.iimagazine.com/green_investing/Articles/2307445/Cashing-In-On-Carbon-Credits.html