Title: The role of the financial services industry in the clean development mechanism: involving private institutions in the carbon market

Authors: Rolf H. Weber, Aline Darbellay

Addresses: Law Faculty, University of Zurich, Ramistr. 74/38, CH-8001 Zurich, Switzerland. ' Law Faculty, University of Zurich, Ramistr. 74/38, CH-8001 Zurich, Switzerland

Abstract: This paper highlights the functions performed by the financial services industry in the clean development mechanism (CDM) of the Kyoto Protocol. The CDM enables industrialised economies to meet their emission reduction targets while supporting environmental projects in developing economies. Since the Copenhagen Summit did not give a satisfying response to the future prospects of the carbon market, reliance has increasingly been placed on private actors in order to keep developing the carbon market architecture. Financial institutions are involved in the CDM market as pooling and transferring economic resources in order to develop CDM projects; they can also enhance market liquidity while trading carbon certificates. The financial services industry is active in the CDM market, providing evidence of the necessity to encompass private institutions in the efforts to tackle climate change. This paper shows the benefits of financial intermediation in the CDM market and also explains some shortcomings.

Keywords: climate change; clean development mechanisms; CDMs; financial services industry; carbon funds; insurance; carbon certificates; carbon markets; private sector; Kyoto Protocol; UN; United Nations; global warming; industrialised economies; emission reductions; reduction targets; environmental projects; developing economies; Copenhagen Summit; conferences; economic resources; market liquidity; financial intermediation; private law.

DOI: 10.1504/IJPL.2011.037892

International Journal of Private Law, 2011 Vol.4 No.1, pp.32 - 53

Published online: 28 Mar 2015 *

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