Morgan Stanley (NYSE:MS) announced today that it plans to invest in approximately $3 billion of carbon/emissions credits, projects and other initiatives related to greenhouse gas (GHG) emissions reduction over the next five years.
The majority of this investment will represent increased commitments to purchase carbon credits from projects as the Firm's Commodities Trading Department expands its existing Carbon and Emissions platform. The remainder will constitute investments in projects and initiatives related to emissions reduction, such as those certified under the Clean Development Mechanism (CDM) and Joint Implementation (JI) initiatives. These projects allow developed countries to transfer and fund emissions-reducing technology in other signatory nations. The United Nations oversees the project registration and approval process.
"We strongly support the use of market-based solutions to meet environmental policies and objectives," said Simon Greenshields, Managing Director and Global Head of Power, associated Power Fuels and Carbon/Emissions Trading and Structuring at Morgan Stanley.
CDM projects produce Certified Emissions Reduction credits that may be bought and surrendered against reduction obligations. JI Projects create Emission Reduction Units that in the future will similarly be used. One hundred and sixty-three countries have signed and ratified the Kyoto Protocol to the United Nations Framework Convention on Climate Change. The objective of the Framework is the stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.
Countries that have ratified are committed to reducing their emissions of carbon dioxide and five other greenhouse gases. Reduction may be direct or imported through trading with other countries that make the reduction. Phase one covers the period 2008 to 2012 and many countries are already considering implementation for phase two. The European Union has already implemented a highly successful trial phase involving capping and trading of emissions allowances across the industrial and utility sectors over the period 2005 to 2007 and is currently considering inclusion of the air transportation sector.
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