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Carbon finance is a new branch of Environmental finance which explores the financial implications of living in a carbon-constrained world, a world in which emissions of carbon dioxide and other greenhouse gases (GHGs) carry a price. Financial risks and opportunities impact corporate balance sheets, and market-based instruments are capable of transferring environmental risk and achieving environmental objectives. Issues regarding climate change and GHG emissions must be addressed as part of strategic management decision-making.
The general term is applied to investments in GHG emission reduction projects and the creation (origination) of financial instruments that are tradable on the carbon market.
Source: Wekipidia
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The market for the purchase of carbon has grown exponentially since its conception in 1996. The following is the estimated size of the worldwide carbon market according to the World Bank[1][2]:
|
Year |
in millions of USD |
||
|
Main Allowances & Spot Markets |
Project based transactions |
Total Market Size |
|
|
2005 |
7,971 |
2,937 |
10,908 |
|
2006 |
24,699 |
6,536 |
31,235 |
|
2007 |
50,394 |
13,641 |
64,035 |
|
2008 |
127,769 |
7,297 |
135,066 |
|
2009 |
140,365 |
3,370 |
143,735 |