Shanny Basar
11 Dec 2007
US investors believe carbon emissions trading is the best way of obtaining exposure to the climate change theme, despite the country not establishing a federal program on the issue.
More than a third, 40%, of the 150 participants at UK bank Barclays Capital’s US commodities investor conference in New York last week said carbon trading would be their preferred way into the environmental markets.
The European Union established a mandatory emission trading scheme in 2005 but some US states have proposed legislation that will not take effect until 2009.
The Regional Greenhouse Gas Initiative is a co-operative effort by 10 North-eastern and Mid-Atlantic states to design a program covering carbon dioxide emissions from power plants, which should launch within two years. California Governor Arnold Schwarzenegger has campaigned against global warming and a cap-and-trade scheme is due to launch in 2010, with five other western states joining by 2012.
However, US businesses would prefer a federal standard rather than different ones across the country. Last week, a greenhouse gas reduction bill from Senators Joe Lieberman and John Warner was passed by a committee although it has to face the Senate.
Richard Rosenzweig, chief operating officer at carbon asset manager Natsource, said: “The US understands markets but the infrastructure for trading is in London and we have lost that edge.”
Barclays Capital last week announced the launch of the first global carbon index that tracks the performance of credits associated with the largest emission trading schemes.
Half the investors at the conference expected to have more than a 10th of their portfolios in commodities over the next three years, a threefold increase on 2005. The bank is expanding its US commodities business.
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