Wednesday, December 12, 2007

Environmental markets, measuring emissions, algae and energy legislation

Environmental Exchange Is Planned. CCX has a new US competitor.

New York Mercantile Exchange parent Nymex Holdings Inc. and a group of Wall Street trading houses plan to launch an exchange for trading carbon emissions and other environmental products. Dubbed the Green Exchange, it will offer environmental futures, options and swaps contracts, Nymex will own 25% of the new Green Exchange venture, and its chairman, Richard Schaeffer, will be CEO until a new one is named. Morgan Stanley, J.P. Morgan Chase & Co. and Credit Suisse Group will be among the partners….Evolution Markets has been the designer of the new exchange.

Accurately measuring emissions: Interesting dichotomy presented in these two posts. Oxford Economist Dieter Helm and others have released a new study stating that the UK is significantly underreporting its annual GHG emissions:
…Official figures fail to capture the true picture because they don’t take into account pollution from aviation, shipping, overseas trade and tourism or the carbon footprint of Britons abroad. According to figures filed with the UN, Britain’s emissions are down 15 per cent compared with 1990. But the report says that the figure is actually up by 19 per cent once the missing emissions from shipping and citizens abroad are included.
Meanwhile one new venture is trying to take advantage of these measurement challenges (on the micro-level) via a partnership using IBM technology, to launch “Green Cert” which promises to ease the monitoring and reporting of carbon emissions. Additional information here. The concept of “empowering the individual”, and making them responsible for their energy usage and emission reductions, is especially interesting to me. I’ll post on this concept at a later date.

Once carbon has a non-volatile, transparent price, I imagine measurement accuracy will be less of a concern. Back in 2005, Trucost put emission levels at about 1,100 tons per million pounds sterling of revenue for FTSE 100 companies. So, for example, a company with $10 billion of revenue (almost all of the Fortune 500) would emit somewhere on the order of 5 million tons. If carbon goes at $40 per ton, and you miss your emissions quotient by 10%, you just cost your company $22 million. That’ll get your bosses notice.

That said, having spent time researching the difficulties in quantifying GHG emissions from tropical deforestation, I certainly recognize the immense challenges of cheaply and efficiently quantifying emissions. It won’t be easy. Expect many the launch of many more companies with new technologies and processes seeking to solve the measurement issue.

Algae to Biodiesel: This concept keeps popping up. I heard Martin Tobias (Imperium Renewables) speak at a conference last year and was intrigued by the idea. GreenFuels is another company in this space that’s drawn interest, but has had some recent problems.

New York taxis boosting fuel economy . Older news, but still interesting. New York City taxicabs purchased after Oct. 1, 2008, will be required to get at least 25 miles per gallon, and those purchased after fall 2009 will have to get 30 mpg. Turnover for NYC taxis averages 3-5 years, as this article from July points out, so expect most taxis to be changed over by 2012.

Senate takes up the energy legislation. Apparently the Senate may begin work on the new energy legislation. The 15% RPS has been dropped, but much of the renewable energy tax incentive package is still on the table (although dropping from $21 billion to $13 billion). This interesting post on Daily Kos states that most of the package focuses on solar subsidies, with extension of various renewable energy tax credits and sizable tax credits for hybrids. According to the post, the bill is exactly one senator away from passage. It’s a Kos diarist though so take with a grain of salt.

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