From the Wall Street Journal:
Investing Directly Adds
To Potential for Profits
In Emissions Trading
After piling into the burgeoning market for trading in carbon-emissions credits, some financial firms on Wall Street and elsewhere are going a step further, getting into the nitty-gritty of fixing leaking oil pipes in Russia and building hydroelectric dams in Latin America to create new credits themselves.
Those projects stand to reduce emissions of carbon dioxide into the atmosphere, one of the chief causes of climate change. The banks see a different kind of green, though. The projects can be converted into carbon credits, which can be sold at a profit on the European carbon market.
For financial firms such as Barclays PLC; Allianz SE's Dresdner Kleinwort and its carbon expert, Ingo Ramming; and Morgan Stanley, the decision to get their hands dirty with carbon-reduction projects is adding a new dimension to the emerging carbon-trading business. By getting directly involved, the firms are no longer simply acting as middlemen executing trades but are sometimes flexing their own financing muscle as well.
"It's a sign that the banks genuinely believe that the multibillion-dollar carbon market is only going to grow and grow," said Andreas Arvanitakis, an analyst at Point Carbon, a carbon-market research firm based in Oslo....MORE