Getting Out of the Carbon Derivatives Market

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“>Clean Development Mechanism (CDM), 60% of market players – companies like Morgan Stanley, Electricite de France SA, and Mitsubishi Corp. – are scaling back, delaying or outright canceling their CDM investments.

The sharp economic downturn in the EU is leading to a drop in greenhouse gas emissions, resulting in less need for the EU allowances (EUAs) mandated under the Union’s cap-and-trade program and for CDM credits.

This falling interest from CDM credit buyers follows a January proposal from the European Commission that would ban the use of CERs post-2012 from the major polluters in the developing world like China, India, and Brazil, which are currently hosts to more than two-thirds of all CDM projects.

Given the many problems with the CDM, shrinking it can only be a very good thing.