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Environmental Commodities

Environmental commodities are the tradable credits resulting from regulations on emissions which quantify the cost and volume of pollution. Some of these credits act in a manner similar to permits, while others represent the production of one unit of clean energy or one unit of avoided/reduced greenhouse gas (“GHG”) emissions.

These commodities play a critical role in environmental markets, enabling companies, governments, and other entities to meet regulatory requirements, offset environmental impacts, or invest in sustainable practices through market-based mechanisms.

There are four main categories of environmental commodity investing:

CAP-AND-TRADE PROGRAMS

CLEAN FUEL CREDIT MARKETS

RENEWABLE ENERGY CREDIT MARKETS

OTHER + VOLUNTARY CARBON MARKET

In this broad realm of opportunity, ECP designs investment vehicles that have either a single commodity focus or are diversified across geographies, sectors, and instrument types. Our goal is to deliver attractive risk-adjusted returns to our investors by identifying environmental markets that have a favorable risk/return profile.

Key emissions-related sectors include:

POWER

INDUSTRY

BUILDINGS

TRANSPORT

WASTE

FORESTRY

DOMESTIC AVIATION

The Case for Environmental Commodity Investing

Environmental commodity markets continue to grow in size, scope, and number, expanding the potential investment universe.

These investment opportunities span a wide range of transaction types, structures, and time frames, and often require deep technical experience and underwriting capabilities.

Historically, these markets were dominated by commodity trading houses and multinational energy firms; more recently, financial institutions and institutional investors have sought direct access to these opportunities – a role at which ECP excels.

Leveraging our 60+ years of collective experience, we see significant investment opportunities because environmental commodities offer:

Access To Inefficient Markets

Uncorrelated Returns Vs. Traditional Asset Classes

Policy Support For Further Market Growth

We believe deal flow will continue to be driven by:

Pre-determined policy goals and regulations that anticipate a higher cost of abatement over time.

Market inefficiencies inherent in the existence of thousands of regulated entities motivated by regulatory/compliance requirements—not by profits.

Market dislocation caused by the limited number of institutional investors focused on a myriad of environmental commodity market opportunities.