The Finance of Climate Change

Climate change is a looming crisis. While politicians may dismiss the problem as suits their own agendas, it is clearly showing up in extreme weather, melting polar ice caps, and temperatures that are trending upwards. Insurance companies are seeing it in increasing claims arising from weather extremes. Scientific models predict the problem will accelerate, with rising sea levels becoming a serious problem this century.

 

While the invader of Iraq stands shamelessly on the sidelines, the Kyoto pact on climate change became law in 2005, with implementation scheduled for 2008. So much needs to be done by regulators, corporations and consumers. Renewable energies need to be tapped. New technology needs to be developed. Emissions caps and trading mechanisms need to be developed. Business leaders need to change how they thing. Some of the work to be done is glamorous. Most is mundane. It has to be done.

This book is about where things stand today and where things need to head over the next few years. It is an edited collection of 30 papers addressing all aspects of this topic. There are papers on policy, the financing of clean initiatives, emissions trading, issues facing specific industries and various initiatives being pursued around the world.

The quality of the articles tends to be excellent. They are informative and well written. If I have a criticism of the book, it is a lack of cohesion. Remember the analogy of blind men each touching a different part of an elephant and not being able to figure out that it is an elephant? This book is similar. Each chapter has its only small perspective. The challenge of climate change is so enormous, it is hard to step back ant take everything in. This book could have provided more of that big-picture view, but it doesn't.

This book will be extremely useful for readers who have some prior knowledge of emissions trading. They will benefit from its detailed information about the many developments taking place around the world. For readers who are new to emissions trading or the Kyoto framework, the book will be heavy going. I recommend starting with James and Fusaro (2006) first.  [December 14, 2006]

Contents

SECTION 1: FRAMEWORK AND FINANCE POLICY ISSUES

1 A Changing Climate for the Finance and Insurance Sector

2 Climate Change and Capital

3 The “Finance-Policy” Gap: Policy Conditions for Attracting Long-Term Investment

4 REEEPing the Benefits: The Case for Renewable Energy

SECTION 2: FINANCING AND CARBON FUNDS

5 Commodifying Carbon

6 Securing Investment for Climate-Friendly Projects: Uses and Limitations of Carbon Trading

7 Unlocking Additionality in CDM Projects

8 Procuring Carbon: The Dutch JI/CDM Approach Through ERUPT/CERUPT

9 Financing Photovoltaic Projects – Plus ça change, plus c’est la même chose?

SECTION 3: TRADING PERSPECTIVES

10 Carbon Facilities as a Means of Sourcing Emission-Reduction Credits

11 Purchasing Pools in Corporate Carbon Compliance: Survey of the Strategic Advantages

12 Choices Facing Firms in a CO2 Cap-and-Trade Emissions Trading Scheme

13 Banking the Valuation of the Commons

14 Weather Derivatives and Carbon Emissions Trading

15 Verifying Value: The Anchor for the Carbon Emissions Markets

SECTION 4: INVESTOR PERSPECTIVES

16 Corporate Carbon Disclosure – The Work of the CDP

17 Investor Collaboration on Climate Change: The Work of the IIGCC

18 Climate Change, Investment Risk and Fiduciary Responsibility

SECTION 5: SECTOR DEVELOPMENTS

19 Climate Change and the Automotive Industry – Impact on Companies’ Value

20 Climate Change Policies and Energy Intensive Industry

21 Best Practice in Strategies for Managing Carbon

22 Aviation and Climate Change: Can Emissions Trading Deliver a Solution?

23 Insuring Climate Change: Implications for the Insurance Industry

24 Protecting Your Carbon Asset: Risk and Insurance in the Greenhouse Gas Markets

SECTION 6: GLOBAL DEVELOPMENTS

25 CDM Financing and its Practice – An Asian Perspective

26 CDM and Renewable Energy in China

27 Making Climate-Change Investments in Emerging-Market Countries

28 The Clean Development Mechanism in Sub-Saharan Africa: Left Out but not Left Behind

29 The Spectre of Liability: Part 1 – Attribution

30 The Spectre of Liability: Part 2 – Implications

 

For related books, see sections:

Markets - Emissions Trading

Markets - Energy & Power

 

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