Top European organisations launch research into financial bodies’ possible contribution to Kyoto

The research, co-funded by the European Commission, Research Directorate General and the Swiss Federal Office for Education and Science, is designed to produce practical insights that will enhance the understanding of financial and technical aspects of emissions trading and the Kyoto Mechanisms. It is hoped that the results will aid international negotiations about aspects such as rules and procedures in the Protocol, and promote their implementation both within and outside Europe.

The main components of the research project include an examination of how the pricing of emission permits will vary under different policy and market structures, and an exploration of the scope for private sector insurance against the financial risks associated with the Protocol. Project financing techniques will also be put under the spotlight, and an examination will be made into changes that are required due to the implications of Kyoto, and the project will study the optimal design of private sector investment funds that will aid the creation of marketable emission permits.

The research will be carried out by a consortium consisting of representatives from private sector financial institutions, including the Gerling Group of Insurance Companies, based in Germany, and researchers from the Swiss University of St Gallen, where research is already carried out in the fields of environmental economics and management.