Looking back over the past 12 months, it’s been very much a year of two halves. While mid-2009 saw the global economy still in the depths of recession, the second half of the year, especially from the point of view of the environmental markets, was filled with hope.

The run-up to the Copenhagen climate talks in December saw expectations built up to – in hindsight – unrealistic levels. Climate change was garnering unprecedented attention at the highest levels of government, evidenced by more than 100 heads of state attending the negotiations. NGOs were talking of the world’s “last chance to save the climate”. And the carbon markets were gearing up for dramatic expansion – with every indication that the US would follow Europe in introducing an economy-wide cap-and-trade system.

Instead, the climate talks produced only the anaemic Copenhagen Accord. The false fury whipped up over the ‘Climategate’ scandal has helped to lower the political heat around climate change. And the failure of the US Senate – thus far – to introduce climate and energy legislation has deferred expected growth in the global carbon markets. Investment in renewable energy is limping along at 2009 levels (see page 6), volumes in the carbon markets have fallen, and investor enthusiasm for clean-tech flotations has been uncertain, amid volatile equity markets more broadly.

So, we hope that this year’s Environmental Finance Awards come at the nadir for the markets we cover. Certainly, in the initial public offerings category, it is solidity and professionalism rather than scale and pizazz that we recognised. STR Holdings – making encapsulants for solar panels – occupies a crucial point on the supply chain, providing investors with a technology-agnostic means of playing the solar story.

In renewables, it was UK utility Centrica’s ability to draw institutional investment into UK offshore wind capacity – a part of the renewables universe that will have enormous demand for capital in the years to come – that attracted our attention.

And, while the carbon markets may be in the doldrums, some are nonetheless looking ahead to their inevitable scaling up. Programmatic Clean Development Mechanism (CDM) projects offer the potential to direct carbon finance to tens of thousands of micro-projects across the developing world. We felt the work that has gone into the first registered project of this type – the Luz Verde project, to distribute energy efficient lightbulbs in Mexico – was more than worthy of our Carbon Finance Deal of the Year award.

In weather risk, a stream-flow hedge for a Chilean hydro energy producer demonstrates how innovative risk transfer can help underpin the profitability of renewable energy generation, while in catastrophe risk, we recognise Swiss Re’s Successor X bond, which is the first cat bond to use an innovative index produced by Zurich-based Perils.

And, for our Personality of the Year, we salute the work of Pavan Sukhdev, study leader for The Economics of Ecosystems and Biodiversity (Teeb). He has been a fluent and highly effective advocate for the application of economic and financial markets thinking to protecting ecosystems and biodiversity. We are confident that his work with Teeb will help transform how business, and society more broadly, values its ecological heritage.

Mark Nicholls, editor

Reporting by Christopher Cundy, Charlotte Dudley, Jess McCabe and Mark Nicholls

Methodology

Nominations for the awards were invited in June for deals completed in the 12 months to the start of June 2010. These nominations were then assessed by Environmental Finance editorial staff, in conjunction with an informal ­judging panel of market contacts.