Authors
Andrew Humphrey, Luciano Diana
It is widely recognised that a carbon price signal is a critical tool for reducing greenhouse gas emissions. This research from Morgan Stanley analyses the function and scope of global emissions trading markets, outlining the theory behind cap and trade markets and the reasons why it is the preferred policy tool for reducing global CO2 emissions. In this report, a proprietary quantitative model is introduced, which forecasts the potential scale of emissions trading markets globally, under business-as-usual, and mitigation scenarios.Business models that have evolved to date around carbon markets are discussed, and major investment and trading opportunities for the future are highlighted.