Carbon Conference Draws Major Financial Players
Recession around the corner? There was no sign of that at a recent conference in San Francisco dedicated to examining issues pertaining to the brave new world of greenhouse gas emissions markets. Instead, around one corner of the vast Moscone Center was JP Morgan and around another Deutsche Bank. Cantor CO2e held down a choice booth and Bear Energy, a division of Bear Stearns Companies, also made its presence felt in a big way at Carbon Forum America 2008. 
As one of the event’s chief backers, Henry Derwent, president and chief executive officer of the International Emissions Trading Association, put it in the conference’s brochure, the gathering was the “first U.S. trade fair and conference dedicated to global business opportunities in the new carbon constrained economy.”
Or, as an attendant in one financial industry booth, who wanted neither his name nor affiliation revealed, bluntly described the attraction: “There’s going to be a lot of money in this.”
“There’s serious demand, serious money – and it could all happen in the next 18 months,” said another, equally publicity shy booth dweller. That time frame was an allusion to the fact that all three major presidential candidates, Hillary Rodham Clinton, Barack Obama and John McCain have endorsed market-based approaches to addressing emissions reductions. Congress could vote sometime this year on a bill sponsored by Connecticut Sen. Joseph Lieberman, an independent, and Republican Sen. John Warner of Virginia that would establish a national cap and trade program.
The resulting market could be staggering in size. For instance, a Duke University study estimated that by 2050 the Lieberman-Warner program could result in carbon dioxide emissions valued at more than $100 a ton. Although greenhouse gases should fall significantly by that time, that would produce a market worth trillions of dollars.
Even without a mandatory program in place in the United States, global transactions could be worth $92 billion this year, a substantial jump from last year, according to Point Carbon, which analyzes the market. At the same time, moves are going on around the United States, including California, to get some kind of market system in place, although much uncertainty still surrounds the efforts.
The big players are awaiting a federal trading scheme to be established, said Milo Sjardin, North American head of New Carbon Finance, based in the United Kingdom, which analyzes the carbon market. “There needs to be actual business,” said Sjardin, manning the company’s booth at the San Francisco trade fair. Right now, he said, there are too many uncertainties for investors.
But it was clear just from the turnout that lots of folks are betting a market emerges soon.
“The money you see in this room is here because it sees an opportunity to participate,” said Josh Margolis, co-Chief Executive Officer of Cantor CO2e, which provides financial services to the energy and emissions trading industries. Nothing less than a “wholesale evaluation of everything we do” is in the works, he said.
He said the financiers understand what the scientists and the policymakers are saying, even if the message can seem a little garbled at times.
“The politicians who are wringing their hands are sending signals to the market,” Margolis said. That message: “Buy, buy, buy.”
