Financial transactions involving carbon-related assets have emerged as a cornerstone of the international efforts on climate change mitigation. Moreover, integration of carbon risks into investment decisions is becoming a pervasive trend in many asset classes, with investor leverage putting market discipline on corporations to manage and disclose carbon-related performance data. In many ways financial markets have become pivotal to the implementation of international climate agreements. Following the financial crisis and the associated global economic downturn, however, market conditions for investors have worsened considerably. How will these adverse market conditions impact the evolution of carbon markets and the prospects for a long-term and effective post-Kyoto treaty? While many divisive issues remain on the negotiating table, optimists still look to the US administration to broker an agreement on climate mitigation and the development of global carbon markets. Moreover, “green” fiscal stimulus packages in many countries may usher in a new era of partnership between regulators and investors in areas of carbon finance, renewable energy and low-carbon technologies.