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Trading Carbon : November 2011
27 CARBON ENTREPRENEURS November 2011 is a sufficient response to the global warming threat. But given the messages coming from researchers and scientists now, we should expect increased foc us on ways to fund adaptation -- including market forces -- and on geoengineering. MM: The science behind climate change is becoming increasingly alarming, but if governments and business ignore the problem the results will be even more catastrophic. We have a mountain to climb (in terms of deploying cash and technology fast enough), but on the other side is the valley, where costs of cleaner energy become much lower and economies become decarbonised. Q: Is the current phase of the financial and economic crisis (high levels of government debt, highly volatile stock markets, signs of another recession in developed countries) hindering efforts to make money in climate or clean energy related investments? PMC: The main factor affecting carbon markets is not the global financial crisis, but the lack of leadership in the political arena and lack of vision of those implementing these weak policies. MS: In general investment is increasing, whether there are carbon markets or not, yet policymakers still need to step in with taxes and subsidies for sectors where the payback is longer term or investor risks are apparent. MM: If policymakers want to stimulate the economy what better way would there be than to build a green infrastr ucture. Indeed, I think there are more opportunities to make money from clean energy than there ever was. But at the same time, the general economic environment is very difficult, the financial and economic crisis of the last few decades is probably the most challenging that the world has faced. We need to spend trillions on transforming the entire energy sector across the planet, and we are already seeing a great growth in investment in renewables, the key is to reach a tipping point where fossil fuel infrastr ucture gets phased out because it's too costly, but we can't do that with market forces alone. SD: One issue that politicians must tackle is fossil fuel subsidies, which in hard economic times is very challenging. But it's key to roll back incentives for fossil fuel industries in order to speed up deployment of renewables. Many types of clean energy could compete with oil and gas if the payments to industries with vested interests could be removed. JB: The reason my new company, Differ, makes early stage investments in companies scaling up small-scale carbon reductions in developing countries, is that we see a lack of seed and venture capital, but also because some developing countries have seen very rapid economic growth recently. The financial turmoil has so far hit industrialised countries much harder than developing countries, so those foc using on the latter could face less trouble. That said, further reduced carbon credit demand resulting from lower economic activity could have a negative impact on us and others in our area of the carbon markets. Q: What skills and qualifications do you think are essential to make money in carbon and/or climate finance? MM: An in-depth knowledge of engineering is key. Potential entrepreneurs would need to understand how new, cleaner forms of energy work and the technology required to harness them. SD: A background in engineering and technology is a massive advantage and understanding how to raise money is also essential. JB: Within carbon markets, there will likely be an increasing need to understand the projects underlying the generation of offsets -- it will no longer be enough to handle the regulatory challenges. Due to the increased fragmentation brought by the pledge-and-review approach internationally, it will likely be necessary for many smaller players to specialise in specific offset types and/or host countries. l I never thought that the use of market forces is a sufficient response to the global warming threat Jorund Buen, Differ Mike Mason, CO2.org: There are opportunities in thorium- powered nuclear reactors
December - January 2011