Document Type
Note
Abstract
Investment in energy-efficient technology is capital intensive, requiring financing and access to credit. Much has been written discussing the efficiency, or lack thereof, of cap-and-trade programs in the United States and, more recently, in the European Union. However, very little attention has been paid to the legal framework for the potential use of carbon credits as collateral to secure financing. This Note endeavors to begin filling that gap. Due to the unique qualities of carbon credits (for example, as a tradeable future right tied to geographic location), the current provisions of Article 9 of the Uniform Commercial Code (U.C.C) may be inadequate. This Note argues that, if the United States establishes a carbon cap-and-trade system, the allocation of carbon credits must be integrated with appropriate reforms to the Article 9 system of secured credit and perfection. Analysis of case law from the United States and abroad regarding emissions credits supports this argument. This Note then proposes an ex ante solution: a unified approach to regulation, allocation, and perfection through a central clearinghouse. A one-stop shop for regulation, allocation, and perfection is essential to the stable functioning of carbon markets. The proposed central clearinghouse maximizes access to credit while also minimizing litigation and transaction costs. By providing a stable legal framework through proposed amendments to Article 9, this Note strives to identify legal solutions to achieve a more economical, energy-efficient future.
Recommended Citation
George M. Padis,
Carbon Credits as Collateral,
16 J. Tech. L. & Pol'y
(2011).
Available at: https://scholarship.law.ufl.edu/jtlp/vol16/iss2/6