Martin Berg is Carbon Emissions Originator at investment bank Merrill Lynch in London. As part of the commodities team he works on transactions that have the ability to reduce greenhouse gas (GHG) emission, which are being sold as carbon credits in the international emissions markets since the early 2000s.
His involvement with climate change and the carbon markets dates back to 1998 when he first worked as a student for a conference of the United Nations Framework Convention (UNFCCC) in Bonn. Initially interested to understand more about the negotiations dynamics and strategies, he continued working for conferences of the UNFCCC until he completed his studies to build a career in the emerging field. He first moved on to the Climate Change Unit of the Organisation for Economic Co-operation and Development (OECD) in Paris to then – interrupted by a graduate programme at Columbia University – work as Carbon Finance Specialist at the New York based hedge fund RNK Capital LLC before he joined Merrill Lynch in August 2007.
Martin holds an MPA in International Energy Management and Policy from Columbia University and a MA in Political Sciences from the University of Bonn.
Merrill Lynch is one of the world’s leading wealth management, capital markets and advisory companies and was founded in 1914. As an investment bank, it is a leading global trader and underwriter of securities and derivatives across a broad range of asset classes and serves as a strategic advisor to corporations, governments, institutions and individuals worldwide. Merrill Lynch also owns approximately half of BlackRock, one of the world's largest publicly traded investment management companies, with more than $1 trillion in assets under management.
Merrill Lynch is active in all aspects of the international carbon market. Martin is part of a team of international professionals led by Abyd Karmali, Merill Lynch’s global head of carbon emissions, which structures carbon related transactions, and trades the commodity around the world. One aspect of the business is to structure emission products for clients that have an obligation under the EU Emissions Trading Scheme, such as European utilities. These companies receive an allocation for the amount of GHGs that they are allowed to emit per year and need to buy emission permits in the event that their actual emissions exceed the allocated amount. Merrill Lynch assists these clients in optimising their compliance strategies with transaction services, swaps, options, cross-commodity transactions and structured financial solutions.
Another aspect is to generate additional carbon credits via the Kyoto Protocol. The treaty allows for projects in countries that do not have an obligation under the Protocol or between two Parties to the Protocol with an emission reduction obligation. The main idea behind these mechanisms is that while it does not matter where emission reductions are achieved to combat global climate change, the costs to do so can vary significantly. It is therefore more cost-efficient to invest, for example, in a wind project in China than to reduce the same amount of emissions at a power generation site in Europe.
Merrill Lynch participates in this UN led effort by investing in companies or projects that have the ability to reduce emissions or to purchase carbon credits on delivery to subsequently trade these in the international market. Examples for such projects are an investment in the Core Carbon Group, a Danish company undertaking greenhouse gas emission projects in Russia or offtake agreements with Merrill Lynch’s commodity clients in China. With offices and professionals around the world, Merrill Lynch it best equipped for these types of transactions and can also assist project developers or aggregators of carbon credits to develop efficient sales strategies by offering credit sleeves and portfolio sales services.
Merrill Lynch is also active in the emerging US carbon market. Together with the New York Mercantile Exchange, other leading investment banks and financial institutions, Merrill Lynch is a founding member of the Green Exchange, a new exchange that will offer a comprehensive range of environmental futures, options, and swap contracts for markets focused on solutions to climate change, renewable energy, and other environmental challenges.
A last aspect is to mainstream carbon finance in the general activities of the Bank. Climate Change became a mega-trend for investors in 2007 with the implication that all investor types increasingly want to ensure that their investment portfolio is “climate proofed” against all climate change related risks and, at the same time, to benefit from any opportunities to invest in a lower carbon-intensive companies or projects.
Merrill Lynch believes that it is important to disclose a firm’s approach to manage its exposure to climate change and is therefore the lead sponsor for the Carbon Disclosure Project since 2006, an initiative of the FT Global 500 (the world’s largest companies measured by market capitalization) to disclose their greenhouse gas emissions, their perceived risks and opportunities from climate change, and their strategies. Furthermore, the Bank developed new products that allow investors to profit from investments in emission reductions certificates or less-carbon intensive companies. For example, the Carbon Emission Tracker allows Merrill Lynch’s Global Wealth Clients to get exposure to the European Emissions Allowances and the First European Carbon Certificate provides investors protected exposure to carbon efficient companies that are positioned to benefit from the drive for clean energy in Europe.
