ECS 2022: Financial Institutions Seen as Key to Carbon-Market Development -OPIS

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BARCELONA—The role of financial institutions in the development of carbon credits as the methodology is evolving was the central topic of discussion at the European Climate Summit on Wednesday at the Financial Institutions and Net Zero symposium plenary.

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The market for carbon credits, which allow a country or organization to produce a certain amount of carbon emissions that can be traded if the full allowance is not used, is a potentially huge investment market that has not yet been used. Till now many areas have not been fully developed. World, agreed participants in the summit.

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Jan-Willem van de Ven, Head of Climate Finance and Carbon Markets at the European Bank for Reconstruction and Development, said the issue was one of alignment between the various parties.

“Within the EU, we have all kinds of carbon policies and standards covering the credit system, and all kinds of standards that cover the carbon side. But they don’t speak to each other,” he said. said. “We need to avoid wasting money and align; banks have an important role to play as they work on governance topics with their customers.”

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Belinda Ellington, Managing Director and Associate General Counsel for Commodity Trading, Structured Products and ESG at Citigroup Global Markets, also emphasized the importance of the role of financial institutions.

“There is a lot of muted policy going on regarding compliance markets and financial institutions participating in the emissions trading system,” Ms Ellington said. “However, without the financial sector, the carbon market would cease to be a market-based mechanism.
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The reason for the increase in carbon prices is not because of banks participating in the market.”

Mark Lewis, head of climate research at Endurand Capital Management, said there was a popular misconception that reporting and disclosing carbon emissions was the goal, rather than reducing carbon emissions and reaching net zero. “There is not enough overlap between what the institutional investor is doing and what the carbon markets are doing,” said Mr. Lewis.

Abid Karmali, managing director of climate finance at Bank of America Merrill Lynch, said companies are committed to investing billions of dollars, but they also face rising carbon asset prices and an increasing rate of disruption in global supply chains.

“It is affecting the way and how quickly industries can advance their energy transition,” Mr. Karmali said. “Companies are making claims on their way to net zero. This is the year we expect to see what companies can and cannot do.”

The European Climate Summit, organized by the International Emissions Trading Association, runs from 23-25 ​​May in Barcelona, ​​Spain.

–Reporting by Benita Driesen, [email protected]; Editing by Rob Sheridan, [email protected]

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