The carbon market is a tantalising opportunity for many investors, but until government policy is firmly established, diving into the market is as dangerous as jumping from a plane without a parachute.
For those willing to jump, though, there could be a nice pile of money to break their fall.
This morning we attended the Wall Street Green Trading Summit in New York, where we heard a lot of granular talk about the carbon markets.
The big picture for the morning was about keeping an eye on the Waxman-Markey, House discussion draft bill of clean energy. That bill, a 648 page beast, was released yesterday and most people speaking seemed very impressed. In spite of its advance state, the bill is still surrounded by uncertainty, and that is affecting investment in carbon markets.
If an investor wants to throw caution to the wind instead of waiting for the legislative picture to clear up, Jack Cogen, President and Founder of Natsource LLC presented three ideas at the conference:
1. Roll the dice, buy carbon credits that are available now internationally and hope they end up as part of the U.S. legislation. There is a profitable opportunity as international credits are trading for less than what the U.S. is anticipated to trade for.
2. Purchase offsets, which is essentially investing in another project that contributes to lowering carbon emissions somewhere in the world. For instance, investing in a Brazilian project that protects forests could count. Says Cogen, “They have to have off sets, so it’s not a bad investment.”
3. Avoid the carbon credits and offsets, and take a shot with new technology. More a play for venture capitalists, but finding a late stage company with technology might worth investing in. Especially with credit a mess, a lot of companies are going to be desperate for money.
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