Tuesday, May 29, 2007

Companies Gear Up For Greenhouse Gas Limits

Companies are betting strict legislation limiting, controlling, or affecting the emission of "greenhouse gases" is going to be enacted by the US congress. Either that, or they are hedging their bets and playing both sides. The amount of money, the effects on our economy and on our pocketbooks is staggering. We're already seeing rising food costs because of the laws passed and the subsidies being given to companies growing corn and distilling it into ethanol fuel.

It is apparent this is just the beginning of the attempt (in vain I claim) to stop global warming and control global climate change. An entire new industry is being created based on the false premise than man is causing global warming and that man can control it. Read this and weep over the insanity of it all. Maybe we should just accept the inevitable and join the party, (by investing). What do you think?

Companies gear up for greenhouse gas limits
Trading of permits grows as Congress considers caps
Congress hasn't come up with a plan for limiting greenhouse-gas emissions, but U.S. companies are wagering billions of dollars that it will.

Convinced that rules aimed at slowing climate change are inevitable, coal-fired power generators are reexamining construction plans, fund managers are raising billions of dollars to invest in projects to combat climate change, insurance firms are devising new products and at least one utility has inserted a novel global-warming provision in a contract.
"It's a matter of when, not if," said Paul Hanrahan, chief executive of AES in Arlington.

The companies are moving now as Senate committees consider five bills that would create a cap-and-trade system, which would issue tradable allowances for limited greenhouse-gas emissions. So far, 21 major corporations have joined a coalition pressing for "immediate action to enact mandatory national legislation."

The Bush administration's opposition to all the mandatory-cap-and-trade proposals hasn't deterred the flurry of activity in executive suites. Wall Street also is mobilizing, with attention to climate change at investment banks such as Goldman Sachs, insurance firms such as Marsh and hedge funds such as Cheyne Capital Management. Clifford Chance, a London law and consulting firm, estimated that the value of credits traded in the voluntary market would increase 16-fold, to $400 million, this year and swell to $3 trillion by 2010, even without legislation.

Cap-and-trade systemAmong utilities, AES, which owns facilities in two dozen countries, has formed a partnership with General Electric to invest in U.S. projects that will eliminate 10 million metric tons of existing greenhouse-gas output a year by 2010, primarily by reducing emissions of methane, a potent greenhouse gas. Those projects would generate credits that could be sold in a cap-and-trade system; until then, the credits will be sold in the voluntary market for credits.

Wisconsin Energy, a Milwaukee utility, sold its nuclear plant to FLP Group in December, writing a novel stipulation into the deal. Under the terms, Wisconsin Energy would own for seven years whatever credits might be given to the plant for generating electricity without emitting carbon dioxide. After that, the two companies would each get half of the credits.

Companies are also taking a tougher look at plans for new coal plants, which produce a lot of carbon dioxide. The prospect of potentially costly greenhouse-gas regulation was one factor in a pledge made by the private-equity firms that are buying Texas utility TXU to shelve eight of the company's 11 proposed coal plants.

The money flowing into investment funds focused on climate-change issues still pales next to the huge amounts of capital flowing into conventional energy projects that emit carbon dioxide. But a growing number of influential banks and industrial firms have vested interests in projects tied to limiting greenhouse gases.

Mark Schwartz, former chief executive of Soros Fund Management and former chairman of Goldman Sachs Asia, has teamed with Jesse M. Fink, co-founder and former chief operating officer of Priceline.com, to start a $300 million fund called MissionPoint Capital Partners to invest in projects related to climate change.

$1.5 billion invested in 'clean technology'
Goldman Sachs said it has invested $1.5 billion over the past two years in what it calls "alternative energy" and "clean technology." These investments promise good returns without new regulations, a spokesman said.

One investment that depends more heavily on climate concerns: a $2 billion coal gasification power project. Goldman subsidiary Cogentrix Energy last month signed a letter of intent to become the lead equity partner in the Texas power plant that would separate carbon dioxide from other emissions for use in enhanced oil recovery or underground storage. This will make the plant more expensive, but the technology could pay bigger dividends if regulations put a premium on global-warming gases.
Goldman has also invested in a wind-farm developer; a solar photovoltaic cell maker; a wind turbine manufacturer; a cellulosic ethanol firm; and the Chicago Climate Exchange, where U.S. companies trade carbon credits on a voluntary basis.
CONTINUED: Carbon regulation 'in the works'
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