sign on form

Stay up to date

Sign up now for all our news
in one monthly digest

Report warns of dangers in carbon markets

FOE US says push to create global carbon markets without global derivatives regulations is reckless
By Friends of the Earth US | Washington DC, Sep 22 2009

As world leaders gather for the G20 economic summit in Pittsburgh this week, Friends of the Earth U.S. released a report warning that the carbon trading system envisioned by the United States is complex, volatile and prone to gaming.

The report, 'Simpler, Smaller and More Stable' finds that current proposals to regulate derivatives are necessary, but far from sufficient to ensure the environmental and financial integrity of these new markets. 

However, in its draft paper on carbon markets and private finance prepared for the G20 Summit, the G20 Experts Group on Climate Change Financing has come out strongly in favor of a global market in carbon.

"It is reckless to push for a global carbon derivatives market when we don't have anything even close to a global system for regulating conventional derivatives," said Michelle Chan, author of the Friends of the Earth report. 

Moreover, the Friends of the Earth report points out that U.S. policymakers have designed a carbon trading system that is inherently difficult to regulate.  For example, the climate change bill which passed the U.S. House of Representatives allows some 30% of carbon traded in the U.S. to be from carbon offset credits.  The G20 climate paper likewise makes several recommendations on how to expand the international market for carbon offsets.

"Most carbon offset credits will likely be traded as over-the-counter derivatives. These derivatives played a significant role in the financial crisis, and are some of the most difficult financial instruments to govern," said Chan. "Not only does this create regulatory risks, but it also opens the door wide to subprime carbon: derivatives that promise to deliver carbon emissions reductions, but may not materialize and could collapse in value."

Image: Demonstrators protesting on Wall Street, October 2008


Michelle Chan, Friends of the Earth US: +1 202 427 3000 

Friends of the Earth US Website


Good login. Redirecting to
'My Banktrack'.
Wrong login. Click here to request your password.
An email has been sent with your login!
Request password
This email is unknown.
<< Back
Please provide one or more search terms

Join our mailinglist

Get all our latest news releases delivered straight to your inbox - or get our News Digest once a month

banktrack tweets
RT @wwwfoecouk: Today, Ruby & her mum moved their living room into a Barclays branch in York. Find out why #Reclaim
Oct 25, 2016
UN urges Bangladesh to scrap coal plant near world's largest mangrove #SaveSundarbans #StopRampal
Oct 24, 2016
Vismarkt 15
6511 VJ Nijmegen
Contact us