Andrew Ertel is a big player in the market for carbon credits--just in time to capitalize on the global warming crisis.
Environmental broker Andrew Ertel makes a living sniffing out ripe opportunities. "When you drive through New Delhi and breathe the air, you want to be part of making a difference," he says.
Ertel, 40, heads Evolution Markets, which sells chits that companies use to offset their emissions of air pollutants. Evolution, perhaps the world's largest vendor of credits for the suppression of carbon dioxide, sells them to polluters outside the U.S. that have agreed to help curtail carbon emissions. They do that by either reducing their CO 2 output or buying credits from another outfit that has done so. The seller of a credit could be, say, a utility in China that has switched from coal to wind power. Each credit is the right to emit one metric ton of carbon dioxide or its equivalent in other greenhouse gases.
Evolution was a pioneer in this industry. The company made the world's first cross-border carbon trade in 2002 when it brokered the sale of credits for 200,000 tons of carbon dioxide from the government of Slovakia to a Japanese buyer. Since then Ertel has hired a roomful of brokers to develop the business. The talent is expensive; Evolution lost $1 million in its carbon business through 2006. "We kept saying, 'We got in too early, we got in too early,'" says Stephen Nesis, 36, an Evolution cofounder.
Being early gave it a jump on competitors. To drum up business, Evolution scouted for carbon-mitigation projects in developing markets that polluters could subsidize. Evolution has arranged financing for methane-capture equipment in Argentina and for a switch by a 120-megawatt power plant in Hungary from coal to biomass fuel. Patrick McCloskey, a former Lazard (nyse: LAZ) banker Ertel hired last year, is working on projects like these: helping a European wind-turbine manufacturer expand; converting Indian coal plants to natural gas. Evolution gets a fee (and credits of its own) for bringing in private investors. It is tricky: Each country has a say about which credits are acceptable. European Union nations accept industrial projects like those Ertel is arranging in India but reject reforestation credits, for instance....MORE