Through a series of regulatory initiatives rooted in the Kyoto treaty and emerging with the pending Waxman legislation, the market's next new billionaires will be innovators who understands how to trade in the emerging economics of environmental finance.
Realities:
* in short order water will be 3x more valuable than oil
* the value of a wind field's offset will exceed the value of the power it produces
* companies will lose value in the marketplace when the offset they buy impacts shareholder value (stock prices will fall when companies don't have sustainable business models)
I won't re-hash all of the evidence of these marketplaces as provided by Tom Lewis or available in environmental finance courses from the likes of Johns Hopkins--but the marketplace for carbon offset and the related products may not sound sexy but these trillion dollar marketplaces have many high powered folks putting much effort into capitalizing on their emergence.
The Green Exchange
Tom Lewis was recently named the CEO of Green Exchange Holdings. The NYMEX Green Exchange has the backing of Constellation Energy, Credit Suisse, Evolution Markets, Goldman Sachs, ICAP, JP Morgan Chase, Morgan Stanley, RNK Capital, Spectron, Vitol, TFS Energy, & Tudor. Essentially the Who's of Who of classic capital markets paired with the biggest players in global environmental markets.
Some Articles:
| Key Players Quietly Building Carbon Market Infrastructure... |
Environmental Finance - Emissions Trading | Socially...
Carbon Market? Build It And They Will Invest
| Private Capital Looks To Cash In On Carbon Trading -... |
Carbon Regulation Creating Rifts Within American Business...
Making Sense And Money Out Of Carbon - Carbon Challenge...
Is It All Beyond Me?
At some level, this high-flying finance backers and the associated economic products give us the impression they are so beyond us.
As usual, the makes of these markets create confidence by asserting knowledge (and Capital) unavailable to the rest of us. The picture might see like this new world of finance is not for the common man--in fact this new world of finance is not even for the brightest and even richest amongst us.
These new markets have the appearance of having the requirements of the esoterica of the derivative and futures wonks in the depths of the financial markets combined with the need for Ph.D in physics. But it ain't so!
The world has never been so flat and the NYMEX will find that the future of green futures will not emerge as a unified market the way Wall Street emerged. Many markets will be made, many by people who appear to have no business "doing the business."
My Favorite Example
My favorite example is Terrapass. A group of students and their professor 4 years ago put together the layman's version of what the Green Exchange will become. What's impressive is that Terrapass may "steal" the business of making millions form offsetting the footprint of their local cement factory from the NYMEX. Offset is offset, whether the market maker is Constellation energy or Terrapass.
Watch out! Its like the gold rush in the wild, wild west. Stake your claim!
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