Conclusive scientific evidence that increased Greenhouse Gas (GHG) levels are having a significant negative impact on the world’s climate, combined with the current thrust towards strengthening the Kyoto Protocol, is drawing governments, corporations, and players in capital markets together to develop market based solutions. A recent World Bank annual estimate of the carbon market put the value at $30 billion with little participation from the United States. This market is likely to grow substantially, with some estimates putting the market size at $1 trillion by 2027.

While the market is still growing rapidly at the international level, it is at an early stage of development in the U.S., due to the failure of the U.S. Government to ratify the Kyoto Protocol. With years of legislative inaction on GHG reduction legislation coming to an end, there is more momentum for mandatory GHG regulation than ever before. Consequently, the demand for GHG abatement technologies and carbon credits will grow. And the commensurate growth with a consistently lowering of an emissions will put pressure on carbon prices until technology solutions become cost effective.

Though the market has grown significantly over the last two years, it still remains inefficient. The global carbon market for projects currently is fragmented, illiquid, and fraught with undue process and regulatory uncertainty. While this does present risk, it also presents return potential for those who are interested in investing in the development of this important marketplace. Thoughtful investment of capital in environmental markets can deliver attractive risk-adjusted financial returns

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