The following interview is based on a story that we recently ran about JPMorgan
The following interview is based on a story that we recently ran about JPMorgan “Cooking up Carbon Credits” (that you can view here: JPMorgan Chase Subsidizes Stoves in Africa to Earn Carbon Credits).
The recent news about JPMorgan “Cooking up Carbon Credits” underscores the booming carbon market. It seems the carbon market is only going to get bigger. What do you think will happen as more capital gets into this market?
Climate change is an enormous problem, and will thus require enormous resources to solve. It is not going to be solved by NGOs and people making donations alone. It requires these kinds of large-scale investments. My hope is that the capital flowing into carbon credits will spur investments in a wide variety of climate efforts: new technologies, acceleration in the growth in renewables, innovative strategies, etc. We are already seeing an increasing level of sophistication as more businesses and financial institutions get involved. Before long, carbon markets should function much more like mature existing commodity markets. What I am hoping we see more of, too, is billions in venture capital helping to finance projects at very early stages.
JPMorgan earns carbon credits by subsidizing stoves in Africa. These carbon credits are then sold to companies at a price that is reportedly higher than the retail value of the stove. Do you think such initiatives should be predominantly revenue driven?
I believe that money will flow to where profits can be made. If JP Morgan makes a lot of money on this project then hopefully millions or billions of other dollars will start flowing into more projects. Thats good.
Do you think government intervention to subsidize carbon credits/cap credit prices will encourage more companies/individuals to offset their emissions?
I do not think government should subsidize carbon credits or cap prices directly, although I do believe government can help to spur technologies and practices through effectively targeted tax policies (including elimination of counterproductive tax breaks). In fact, I believe that emission allowances should be auctioned and not given away (which is essentially a government subsidy). Voluntary carbon credits are pretty inexpensive now. Im not sure government intervention to reduce prices will have much effect on the number of individuals or companies that choose to offset.
Business Development Director
It’s a known fact that investments in renewables such as wind, solar, hydro power or reforestation projects are widely used forms of carbon offsets. But who knew that investing in cook-stoves could earn carbon credits? JPMorgan Chase did.
The investment bank is currently involved in a project that subsidizes energy-efficient stoves in Uganda. Not only do the stoves work with lower amounts of fuel, bring about a reduction in the pollutants that have an adverse effect on the lungs, but also each stove reduces carbon emissions by 2 or 3 tons per year as compared to regular ones. The idea to use these stoves for earning carbon credits was developed by the offset provider – Climate Care, that was purchased by JPMorgan last year.
The venture is expected to rake in huge amounts of revenues and JPMorgan has plans of expanding the cook-stove project to cover Kenya, Ghana, Cambodia along with other regions. The credits earned by the bank are being sold to retailers such as Land Rover UK and Aviva Insurance.