Street Clears the Air
Going green could bring a lot of green to investors and investment banks.
Fast-emerging opportunities to trade carbon dioxide -- the gas linked to global warming -- are moving it into the limelight.
And Wall Street firms better known for making a bundle trading traditional commodities such as natural gas and oil are seeing an opportunity to make money from efforts to clean up the environment.
Morgan Stanley (MS) announced last week that it is committing $3 billion over five years to expand its existing carbon and emissions trading business, including private equity investments in projects related to emissions reduction.In September, Goldman Sachs (GS) purchased a 10% stake in the Chicago Climate Exchange -- a three-year-old electronic commodities exchange that focuses exclusively on trading greenhouse-gas emission allowances in the U.S. Carbon trading is catching on in the U.S. and especially in Europe as a way for countries and companies to comply with strict guidelines for reducing so-called greenhouse gases such as carbon dioxide. The concept is an outgrowth of the Kyoto Protocol, an international treaty designed to reduce the risk of global warming. The U.S. does not follow the treaty, which President Bush rejected soon after he took office in 2001. Bush said the measure was too punitive on polluters and the mandates to reduce carbon emissions would hurt the economy. The process entails the buying and selling of "allowances,'' the amount of carbon dioxide emissions companies are allowed to emit under the Kyoto treaty. Companies that emit less pollution can sell their excess allowances to other companies, which pollute too much and can't reduce their emissions to acceptable levels.
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