Trading Carbon at the Wall Street Green Trading Summit
We’re coming at you live with more special Red, Green, and Blue coverage from New York’s very own Wall Street Green Trading Summit.
It’s Lunchtime now at the WSGTS, and I just emerged from another dizzying bout of acronyms to find myself totally shocked by how little I know about big market investing. Fortunately, I stumbled on Open Carbon World, an open source project on carbon footprints that is here at the conference. They have accumulated the following glossary of terms, acronyms and etc. to help novices like me navigate these crazy fast talking presentations. If I drop one or two over the next few days, please forgive the frazzled brain, and give them a look up!
>> More Wall Street Green Trading Summit: The Species Bank?, Carbon Markets, Solar Panels and the Electric Grid
OCW is presenting tomorrow, so I’ll reserve final judgment ’til then, but expect a post on some sweet open source ideas having to do with footprints and offsets.
OCW is presenting tomorrow, so I’ll reserve final judgment ’til then, but expect a post on some sweet open source ideas having to do with footprints and offsets.
OK, so Carbon Trading, huh?
The murky mysteries of the market continue to elude me. The second session today was all about the carbon offset market: where the money is, where the investment opportunities are and will be, and who is making the rules about what a carbon offset even means.
The problem with most offset trading is that 85% of America has already been labeled off-limits. They have to reduce their own carbon footprint, let alone sell offsets to others. However, that 85% number is very hard to pin down: there was an entire presentation today, for example, about investing in Methane capture and destruction. All well and good, unless the Obama administration decides that all coal mines need to destroy a certain amount of Methane as part of their baseline. In which case: Kaput! No more offset! This means that anyone looking to invest in this alleged market is A) scared, and B) working on some pretty small margins. How small? Well, Obama and his team are changing the rules right now, and it has most of these investment guys feeling like they are on thin ice.
Obviously, no one wants to back the wrong horse, which leaves many of the people here feeling like the investment opportunities are in CMDs (Clean Development Mechanisms) in foreign countries. Hopefully, this means looking at real investment in infrastructure and getting offsets from building a greener world, instead of just playing against imaginary numbers of what can be produced versus what is being produced. Of course, then there is the whole tariff issue that I wrote about before, but the consensuses seems to be that the market can deal with those problems. My big take away from all this talk, though, is that the latest and greatest in carbon investing is, in short: we are waiting for people to tell us what the rules are. Did you know that there is basically one person in California that decides the rules for if a Carbon Offset is valid or not? Apparently there is. Her name is Mary, and her word appears to be law. I certainly learned something today!
I can’t lie to you though: there was a lot of discussion about leveraging, futures and nuanced details that was over my head. People are making some money trading around the edges of these markets, but the big explosion is, by all accounts, still to come.
Excuse Me, Waiter? What Year is this Carbon?
There’s this delightful distinction being drawn here between types of carbon. There is carbon with a face, or charismatic carbon, meaning an offset or project where you know the back story and people are excited to deal with it. Solar panel projects for poor folks in Sri-lanka is the oft-mentioned example of this, but you get the idea. The other type is Bar-Code carbon, which I guess means all the offsets and moments around the edges of of big business that are quantified, packaged and sold. This leads us to the division of markets.
On the one hand, there are voluntary markets for people trying to look green (did you know that 77% of Americans would rather invest in a company that seems to be carbon responsible? That’s a number that James G. Rhodes, the Chief Operating Officer of the GE C02 offset group, threw around). On the other, you have compliance markets for those needing to get in under a law. It’s this second kind of market that no one really understand yet, and it’s this second kind of market that people are still waiting on to really get going once the rules are set, and we figure out how much the playing field will be regulated and by whom.
However, the idea of carbon having a good vintage, or a good back story… that cracks me up.
Please! Ask me questions! If I don’t know the answer… well, I am in the room with some smart dudes. Maybe they might have a better shot then I!
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About the Author
Alan Smith Alan Smith is a Freelance Producer in Brooklyn New York who’s been fortunate enough in the past to work on a Peabody award winning radio show (the Brian Lehrer show, WNYC Radio) and an Emmy nominated TV program (Brian Lehrer Live on CUNY TV). Other highlights include PhilanthroMedia, a new media company which works for social change with non-profits and foundations across the globe. In my spare time, I’m interested in the science and politics of the current green movement, and write about those things in and around whatever else crosses my grill at www.livingtheamericangreen.org
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