Regulatory Uncertainty and Opportunity Seeking : The Climate Change Clean Development Case

Regulatory uncertainty has been inherent to climate change in the absence of a successor to the Kyoto Protocol and with ongoing policy discussions on how to proceed. To facilitate steps to help address the issue, many companies have called for more certainty and a stable policy framework. What has remained underexposed, however, is that, besides having clear disadvantages, regulatory uncertainty may also benefit some companies if they recognize the opportunities of flux and move early. This lack of attention may be due to the fact that disadvantages are easier to pin-point and study than opportunities, also because companies tend to be much more open and explicit in emphasizing problems as they publicly seek political support or financial redress, while keeping strategic opportunities for themselves. Despite these practical difficulties of data collection, the relevance of opportunities related to regulatory uncertainty is very high, for managers but also for policy-makers and academics. To shed some more light on the phenomenon, this article explores regulatory uncertainty and opportunity seeking for the climate change clean development case. It unravels opportunities that have emerged for different types of companies, including utilities, banks, project development & carbon offset companies, brokers, exchanges, consultants, auditors and legal services providers. The article also shows how opportunities have evolved over the years, and have varied for different types of companies, related to fluctuations in the degree of uncertainty and the evolution of clean development projects and the related carbon market