Monday, October 12, 2009

Carbon Trade: "Blue Source, Goldman in $12 million carbon deal"

A year ago we posted "Carbon: Goldman Sachs Hooks Up with Blue Source":
From EarthTimes:
The Goldman Sachs Group, Inc. (NYSE: GS) and Blue Source LLC today announced a strategic alliance that combines Goldmans global leadership in commodities trading and financial risk management with Blue Sources leading climate change portfolio. As part of the alliance, Goldman Sachs has purchased an equity stake in Blue Source LLC.

Goldman Sachs will off-take, structure and market a broad range of verified emissions reductions (VERs) resulting from certain greenhouse gas (GHG) reduction projects in Blue Sources portfolio, including those associated with methane management from coal mining, wastewater treatment, landfills and animal waste; energy efficiency; carbon capture and sequestration from fertilizer and natural gas production; and industrial gas destruction....MORE

While Lehman shut down its carbon trading operation last month (with $385 million in projects), the banks see this as a shot at replacing the revenue lost by the market's realization of the phoniness of the mortgage racket. And Goldman plans to be there. From our February 28 post: "Will carbon-trading happen? Goldman hopes so, backs APX":

The verifiers hold exactly the same position in the carbon world as appraisers do in the mortgage biz.

As we get into structured carbon finance (carbon notes, carbon backed securities) really slicing and dicing the cash flows, there will be room for all kinds of shenanigans. The key difference is that whereas Mortgage Backed Securities had real estate (even if overvalued) backing them, CBS's will be built on the absence of an invisible gas. Is it any wonder that GS is interested?...
Today we see the love-child of that hook-up via Reuters:
The president of carbon offset developer Blue Source said his company and Goldman Sachs Group have completed a transaction of carbon credits worth $12 million that he called the largest publicly announced U.S. offset deal.

Blue Source generated the offsets from U.S.-based projects involving stopping forests from getting cut down, and capturing and burning a potent greenhouse gas given off by landfills and coal mines.

The forestry offsets were generated by convincing farmers in North Carolina not to cut down tree stands, even though they had permits to do so, Greg Spencer, president of Blue Source, said.

Goldman marketed the credits for Blue Source, which were then sold to CE2 Carbon Capital, a U.S. investor and owner of carbon commodities. Goldman bought a minority stake in Blue Source last year.

The companies would not reveal how many of the credits were sold or the prices each type of offset garnered....MORE