Carbon Capitalists Warming to Climate Mkt using Derivatives

[katty]

more: http://www.bloomberg.com/apps/news?pid=20601086&sid=aXRBOxU5KT5M

EXCERPT: The U.S. Senate is debating a clean-energy bill that would introduce cap and trade for U.S. emissions. A similar bill passed the House of Representatives in June. The plan would transform U.S. industry by forcing the biggest companies -- such as utilities, oil and gas drillers and cement makers -- to calculate the amounts of carbon dioxide and other greenhouse gases they emit and then pay for them.
Estimates of the potential size of the U.S. cap-and-trade market range from $300 billion to $2 trillion.

Banks Moving In

Banks intend to become the intermediaries in this fledgling market. Although U.S. carbon legislation may not pass for a year or more, Wall Street has already spent hundreds of millions of dollars hiring lobbyists and making deals with companies that can supply them with “carbon offsets” to sell to clients.

JPMorgan, for instance, purchased ClimateCare in early 2008 for an undisclosed sum. This month, it paid $210 million for Eco-Securities Group Plc, the biggest developer of projects used to generate credits offsetting government-regulated carbon emissions. Financial institutions have also been investing in alternative energy, such as wind and solar power, and lending to clean-technology entrepreneurs.

The banks are preparing to do with carbon what they’ve done before: design and market derivatives contracts that will help client companies hedge their price risk over the long term. They’re also ready to sell carbon-related financial products to outside investors.

[kenny blankenship]

1. There really was no reason to keep our financial disasters and our ecological disasters separate

It was an arbitrary division that stopped us from realizing the natural synergies between them. Together, they will be so much more than just the sum of their parts.