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The Future Price of Carbon

Bill Roth | Monday March 15th, 2010 | 0 Comments

According to SBI’s Energy’s Carbon Emissions Trading Markets Worldwide report the value of carbon market trading has grown from $727 million in 2004 to $118 billion in 2008 with estimates of growth to $669 billion by 2013. Much of this anticipated volume is based upon expectations that national and international governments will continue down the path of restricting greenhouse gas emissions, including the use of markets to establish a price for CO2 emissions.

A major question for businesses and consumers is what will be the future price for emissions? The related question is what impacts will the future price of carbon have upon renewable energy projects, legacy fossil fuel systems and jobs?

A panel discussion recently held at the Harvard Club in San Francisco addressed these questions.

The panel included many of the pioneering leaders in carbon trading and emissions reduction validation, including Neal Dikeman, partner at Jane Capital Partners , founder of CleanTech.org and chairman of Carbonflow ; Josh Margolis, CEO of CantorCO2e; Marc Stuart, co-founder of Ecosecurities; Miguel Rescalvo, director for Climate Change Services North America for Det Norske Veritas; and Paul Architzel, partner at Alston & Bird.

The extent of interest on this topic and in the speakers was evident from the over-capacity, standing room only crowd of 200 people that included representatives from our largest oil and utility companies.

One of the first issues discussed was an assessment of the implications of COP15 on carbon trading and future prices. No panelist saw a “round two” path for a global treaty. The consensus was that Copenhagen was the “end of the beginning.”

Rather than a focus on international action, the panel was focused on the potential for action by individual nations and for binding agreements between nations. The consensus was that this was a natural path, and that all other trade related questions would be solved down the line.

The other agreement among the panelists was that two 800 pound negotiating gorillas stood in the way of global treaties: China and the United States, both of which pose major emission concerns. The panel surfaced two potential paths for resolution: one is a trade treaty between China and the United States that sets a pricing mechanism for reducing CO2 emissions. The second is a trade war where each country uses the issue of CO2 emissions as a tool for gaining competitive advantage.

Adam Boucher, CEO of Adam Capital put it best when he told me:

Anything you invest in–be it a car, house, or anything else–is a carbon asset or a carbon liability. Massive action is what is needed if you want to avoid the inevitable pain that will follow in the wake of current and pending legislation. I am encouraged by how investors and companies are increasingly aligning with this valuation model. The good thing is that markets adopt much quicker than governments.

Bill Roth is the founder of EARTH 2017 and author of The Secret Green Sauce .


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