Banks that have been building up carbon trading and finance desks include Goldman Sachs Group, Citigroup, JPMorgan Chase & Co and Barclays. They’re looking to finance the development of carbon sequestration projects, to trade credits and to advise corporate clients buying offsets. They’re also keen to support local projects in emerging markets that lack the financial clout to scale up their work.
“A lot of project developers don’t have huge balance sheets and have difficulty raising money,” said Sonia Battikh, Citi’s global head of carbon offsets trading. “Working out how to bridge that financing gap and channel money to projects is where a bank like Citi can play a role.”
Wall Street is racing to get a foothold in a market that has the potential to reach as much as $1 trillion, as offsets offer a way for companies to hit net zero without actually eliminating all their emissions. Rich Gilmore, the chief executive of investment manager Carbon Growth Partners, said it’s already clear there’ll soon be an acute under-supply of high-quality credits, given the demand. “The Wall Street giants will need to balance speed to market with deep understanding of the rules,” he said.