Carbon credit trading has increased dramatically in the last year, including in the United States, where firms trade European allowances under the Kyoto Protocol's Clean Development Mechanism (CDM). However, due to a lack of consensus in international climate negotiations and little progress towards a new U.S. greenhouse gas emissions agreement, investors are becoming less interested in carbon credit trading, according to a spokesman for private equity firm MissionPoint Capital.
Investors say they are concerned about the current direction of United Nations climate talks. They argue that after 2012, there is a lot of uncertainty as to what will happen with these markets. Some on Wall Street fear that the U.S. may refuse to sign onto a binding international carbon reduction commitment unless China, India and other major developing world emitters do the same. Some investors are therefore worried that there may not be a global carbon market trading system and that they should be more cautious when investing in these types of emissions credits in the future. Many are beginning to take the approach to invest cautiously and avoid "offset projects in sectors with a high likelihood of regulation."