Eco-finance. The legal design and regulation of market-based environmental instruments

Abstract:

The market in tradable pollution instruments began in December 2002 with the sale by the Government of Slovakia of 200,000 tonnes of greenhouse gas emission credits to Sumitomo Corporation, a Japanese trading company. The market has grown exponentially and in 2003 accounted for a trade in such instruments amounting to 70 million tonnes. This book is about two of the most important types of market-based environmental instruments; market-traded environmental instruments and environmental financing instruments.

The work is organised over six chapters, the first of which is by way of introduction. Chapter two looks at the experience in Canada and the US, in particular the legal structure of the tradable allowance and credit regimes developed to counter air pollution by reductions in emissions of sulphur dioxide, nitrogen oxides, volatile organic compounds and other pollutants, and at Australia and the US in respect of water pollution. Chapter three explores the legal structure of the cross-border tradable allowances and credits contemplated by the Kyoto Protocol and the EU Directive on emissions trading. Chapter four addresses the legal structure for temperature swaps and explores key legal issues facing the market in weather derivatives. Nature linked securities are the focus of chapter five, and as for those instruments discussed in chapter four the prospect of recharacterisation as (illegal) insurance products is also considered. Chapter six examines the legal structures and investment strategies of environmental investment funds, including the new class of environmental hedge funds.

The work will interest a broad range of legal, governmental and business professionals including environmental regulators, financial markets professionals and regulators.