Carbon-Trading Expert Peter Fusaro: Six Wall Street Firms In Line For Profits Of Up To $1 Billion Or More Per Year
Submitted by EnergyTechStocks.com
With Wall Street in serous need of a major new source of income following huge losses in real estate ventures, several of the Street’s heavyweights are on the cusp of billions of dollars in fresh profits from carbon trading.
That’s according to Peter Fusaro, noted head of carbon-trading consultancy Global Change Associates in New York. Fusaro told EnergyTechStocks.com that he thinks six major Wall Street investment banking firms – Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, JPMorgan Chase and Barclays – could each turn a profit of anywhere from $250 million up to $1 billion or more per year trading carbon credits under a global market that would include the United States.
“Carbon is de facto becoming a new asset class for investors, as it is not correlated to any other market,” Fusaro recently wrote in an article for energy consultancy UtiliPoint International.
To be sure, it’s not certain that Wall Street’s new golden goose will be laying billion-dollar eggs anytime soon. At least two big problems could delay and possibly, though not likely, scuttle the creation of a global carbon trading market. The first is that the market as it has been operating in Europe appears seriously flawed, with environmentalists and others charging that some of the credits being sold are bogus. The second is that, even though both U.S. presidential candidates favor including the U.S. in a global carbon trading market, powerful interests in the energy industry are strongly opposed. Moreover, somebody ultimately must pay for the projects that serve to clean up the environment, and with most Americans already in a financial bind, they may strongly resist the notion of picking up the tab through higher utility and other bills. (See Survey of U.S. Consumers’ Favorite ‘Green’ Brands Suggests Public Support For Cap-and-Trade in Trouble.)
Carbon trading markets serve to reduce the amount of carbon dioxide in the atmosphere by providing a financial incentive, as well as a spur, to go “green.” The incentive is that whoever undertakes a project such as a wind power farm or a concentrating solar power (CSP) facility earns a “credit” for that carbon-lowering project that can be sold in the marketplace, with Goldman, Morgan and the other investment banks acting as broker, the same as in the stock and bond markets. The spur is that a government entity sets a limit on the amount of CO2 a business can annually emit into the atmosphere. Businesses that fail to achieve that goal are forced to buy offsetting credits. The annual limit is reduced each year, thereby driving broad carbon reduction.
While obstacles remain, with the amount of money Wall Street stands to make experts say carbon trading is likely to arrive in earnest by around 2011 or 2012. It should be noted that Fusaro said those six Wall Street firms will make upwards of $1 billion or more each per year just from carbon trading. They also are expected to make billions more by financing carbon-reducing projects whose credits can then be sold.
