Climate Change Capital: Towards a carbon hedge fund
"The space is starting to get more cluttered"
Climate Change Capital launched a €800 million private equity fund in 2006 to invest in the carbon markets. Gareth Hughes, head of corporate development at Climate Change Capital, says that with more opportunities and greater liquidity in the markets a hedge fund structure will eventually become more plausible for a carbon financing investment vehicle, particularly through the use of side-pockets for less liquid investments requiring longer-dated securities. "We look for enterprises and projects that will make a meaningful and sustainable contribution to reducing the world’s carbon emissions and, as a consequence, generate quality emission reduction credits to trade," says Hughes. "In addition to vanilla off-take agreements we look to add value to the project owner or developer by making, for example, advance payments to these entities or to equipment manufacturers directly to facilitate the purchase of the equipment required to generate the reductions.