EMERGING OPPORTUNITIES IN GLOBAL
CARBON EMISSIONS TRADING:
CREATING VALUE, MANAGING RISK
Thursday, January 18, 2007
LETTER FROM MAYOR BILL WHITE, CITY OF HOUSTON 4
LETTER FROM CONSUL GENERAL JUDITH SLATER, 5
BRITISH CONSULATE- GENERAL, HOUSTON
EXECUTIVE SUMMARY 9-10
SUPPORTING ORGANISATIONS 18-21
WELCOME FROM MAYOR BILL WHITE
As mayor of Houston, I welcome everyone to the first conference on Carbon Emissions Trading hosted by
the British Consulate-General and the Greater Houston Partnership.
Houston is America's great city of opportunity and, as the world's energy capital, an integral part of the global economy. Our city
has a diverse economic base and is a key center of many industries, such as transportation, healthcare and research &
development. Houston's long history of innovation in the oil and gas industry uniquely positions the city nationally and
internationally as a location for such a dialogue about carbon emissions trading.
Educating our business leaders and citizens on air quality and environmental issues is important to maintain standards that help
make Houston a great place to live and work. For example, air quality improvements can create new business opportunities and
keep Houston a vibrant city for decades to come. This event will focus on these issues, and hopefully lead to many successful
partnerships in carbon markets between the UK and Houston.
I hope those visiting our city for the first time will have an opportunity to share in the Houston experience, taking with you
lasting impressions of the spirit, vitality and tradition that characterize our city. I hope all visitors will have an enjoyable and
rewarding stay, and look forward to having you return again soon.
WELCOME FROM CONSUL-GENERAL JUDITH SLATER
A big welcome to all of you, and thank you for attending the British Consulate- General’s first event on
Carbon Emissions Trading in Houston.
The British Government is committed to addressing the challenges posed by climate change. British Prime Minister Tony
Blair has played a leading role in recent years in the drive to combat global warming, in particular by reducing carbon
emissions. As a nation, the UK is committed to a 60% reduction on its 1990 levels of carbon emissions by 2050. We
maintain that a high-level, public-private framework for low-carbon investments and discussion of the economics of climate
security will help us to respond to these new challenges.
Whilst the federal government here has yet to follow suit, we have already seen commitments by several states in the U.S. to
reduce their emissions. The independent Stern Review on the economics of climate change, published this past October,
concluded that the establishment of a carbon price, through tax, trading or regulation, was an essential foundation of
climate change policy. The EU Emissions Trading Scheme is now the centrepiece of European efforts to cut emissions.
Carbon emissions markets are developing quickly and carbon market structures have become a near term necessity in the
Given London’s strength in financial services, and its reputation as a centre of innovation for trading practices, London has
become the emissions trading ‘hub’ of Europe, with much of the trading infrastructure based there.
Houston, the international energy capital, also has a long history of innovation in energy markets that uniquely positions
the city to leverage the next wave of opportunities in carbon emissions trading. New businesses springing up from evolving
carbon markets aligns with Houston’s entrepreneurial spirit. I hope that this will lead to the forging of strong collaborative
frameworks between the UK and Houston, lasting well into the future.
Finally, I would like to thank the Greater Houston Partnership, our very generous corporate sponsors and our partners for
their support of this Conference.
Consul-General Judith Slater
British Consulate- General, Houston
UK TRADE & INVESTMENT WHO WE ARE
UK Trade & Investment is the lead Government organisation that supports companies in the UK
doing business internationally and overseas enterprises seeking to set up or expand in the UK.
We work in close partnership with the English regional development agencies and the national
development agencies in Scotland, Wales, and Northern Ireland. UK Trade & Investment will
provide you with the support and strategic partners you need to succeed in the UK.
WHERE TO FIND US
UK Trade & Investment has an extensive network world-wide. With commercial teams based in
offices around the world, and a network of specialists throughout the UK, we are uniquely
positioned to help your business across national boundaries. For more information visit us at
UK TRADE & INVESTMENT CONTACTS IN HOUSTON:
Consul, Head of UK Trade & Investment
1000 Louisiana, Suite 1900
Houston, Texas 77002
713-659-6270 x 2140
Vice Consul, Energy
Business Development Associate
THE GREATER HOUSTON The Greater Houston Partnership is the primary advocate for the Houston region. It is comprised
PARTNERSHIP of a strong network of public, private, government, and nonprofit partners working together to
achieve economic prosperity and enhance Houston area’s quality of life. More than 2,000
Member companies collaborate on more than committees, three councils, and 10 advisory boards
dedicated to enhancing the business and living climate in the Houston region. These Members
recognize that in working together, companies large and small, individuals and civic organisaions
can make this region a business magnet and a shining example for cities around the world.
Emerging Opportunities in Global Carbon Emissions Trading:
Creating Value, Managing Risk
Thursday, January 18, 2007
The Federal Reserve Bank of Dallas - Houston Branch
1801 Allen Parkway
Moderated by: Dr. Jeff Chapman, Chief Executive, The Carbon Capture & Storage Association
7:00 – 8:00 AM REGISTRATION, CONTINENTAL BREAKFAST & NETWORKING
SPONSORED BY VAN NESS FELDMAN
8:00 – 8:10 AM OPENING REMARKS AND INTRODUCTION TO MAYOR BILL WHITE
Jeff Moseley, President, Greater Houston Partnership
8:10 – 8:15 AM WELCOME FROM CITY OF HOUSTON
Mayor Bill White, City of Houston
8:15 – 8:20 AM WELCOME FROM THE BRITISH CONSULATE-GENERAL
HM Consul-General Judith Slater
8:20 – 9:00 AM INVESTING IN THE RESPONSE TO CLIMATE CHANGE
James Cameron, Vice-Chairman, Carbon Disclosure Project
9:00 – 9:30 AM CARBON EMISSION ALLOCATIONS & TRADING
Leonhard Birnbaum, Director, McKinsey & Co.
9:30 – 11:00 AM MARKET STRUCTURES: GLOBAL CARBON MARKETS
This panel will examine the EU emissions trading scheme and other regulatory frameworks, carbon price drivers,
supply and demand issues and future market dynamics.
CHAIR AND OPENING ADDRESS
Mark Proegler, Director, Emissions Markets Group, BP
I Ian Carter, North America Policy Coordinator , International Emissions Trading Association
I Mason Henderson, Manager, Cantor Fitzgerald EBS
I Guy Turner, Director, New Carbon Finance
I Toby Campbell- Colquhoun, Trader, Environmental Products, Shell Trading, London
11:00 – 11:20 am Networking Coffee Break
11:20 – 12:20 PM VERIFICATION, TRADING, & REPORTING: AN INTEGRATED APPROACH
This panel will assess the impact of multi-scheme CO2 governance on business processes and
CHAIR AND OPENING ADDRESS
Mark Earthey, Vice President, Product Management- Europe, SunGard Energy Solutions
I Wilhelm Wang, Certified EMS Lead Auditor, Marketing Manager, Sustainability, BSI Management Systems
I Francois Dauphin, Environmental Offering Director, Logica CMG
I Craig Windram, Director & Founder, E3 Europe
12:20 – 1:30 PM KEYNOTE LUNCHEON: THE CONTINUING EVOLUTION OF SUSTAINABLE FACILITIES AT WAL-MART
Charles Zimmerman, Vice-President, Prototype & New Format Development, Wal-mart Stores Inc.
1:40 – 2:40 PM INTERNATIONAL PROJECTS: CLEAN DEVELOPMENT MECHANISM, JOINT IMPLEMENTATION
From new certified forestry projects in China and projects in India to the transition countries of Central and
Eastern Europe, enhanced capacity is providing firms with the ability to more accurately match carbon
exposures. This session will examine the investment climate in the most active Clean Development and Joint
CHAIR AND OPENING ADDRESS
Chandra Shekhar Sinha, Senior Finance Specialist, Carbon Finance, World Bank
I Ricardo Nogueira, Counsel/Investment Advisor to Trading Emissions PLC,
EEA Fund Management
I Andy Dvoracek, Senior Project Manager, EcoSecurities Group PLC.
2:40 – 3:00 pm Networking Break
3:00 – 4:00 PM RAPIDLY EVOLVING US MARKETS AND BUSINESS CLIMATE
This panel will include an update on the Regional Greenhouse Gas Initiative, developments and plans for action
in California, and an overview of legislative proposals in the United States.
CHAIR AND OPENING ADDRESS
Kyle Danish, Attorney, Van Ness Feldman
I Victor Flatt, A.L. O’Quinn Chair in Environmental Law, University of Houston Law Center
I J. Greg Spencer, President, Blue Source LLC
4:00 – 4:30 PM HOUSTON’S ROLE IN ENERGY MARKETS
Vince Kaminski, Professor, Jones Graduate School of Management, Rice University
4:30 – 5:00 PM NATURAL GAS IN A CARBON CONSTRAINED ENVIRONMENT
Jim Yardley, President, El Paso Pipeline Group, El Paso Corporation
5:00 – 6:30 PM CLOSE AND NETWORKING RECEPTION
SPONSORED BY BP
UK Trade & Investment at the British Consulate-General Houston, in In the presentation entitled “Investing in the Response to Climate
collaboration with the Greater Houston Partnership, hosted a Change,” James Cameron, Vice Chairman of London-based Climate
conference on Carbon Emissions Trading in Houston. The conference, Change Capital emphasized that “climate change is an energy problem
Emerging Opportunities in Global Carbon Emissions Trading: Creating and energy is an infrastructure problem.” To satisfy global energy
Value, Managing Risk, addressed how current emissions trading needs, an infrastructure must be developed that promotes economic
systems are creating business opportunities, fostering innovation and profitability and environmental sustainability in the face of finite
technology development, and influencing global financial systems. resources. It is imperative that world governments address climate
The international market for carbon emissions trading is currently change immediately. Climate change poses immediate threats that
worth approximately $30 billion, and experts predict that the carbon governments cannot address through proxy and delegation. Rather, a
market will reach $150 billion by 2012. robust market must continue to develop that allows investors to make
long-term decisions based on the price of carbon.
London’s position as the epicentre for carbon emissions trading,
coupled with Houston’s international energy expertise, highlighted the In addition, the conference highlighted the business opportunities
conference’s objectives of encouraging the continued innovation of provided by carbon emissions trading in Kyoto and non-Kyoto
energy markets and developments in carbon emissions trading. markets. The presentation entitled “Emissions Trading from a
Houston has the potential to become a key global partner to London Business Perspective” presented by Dusseldorf-based McKinsey
and an industry leader for carbon trading in the United States as Director, Dr. Leonhard Birnbaum focused on the short-term forces
domestic markets develop. driving the carbon emissions market and the potential hazards
emerging markets must avoid. Climate change can be addressed
Recognizing the harmful effects of climate change upon the global completely absent philanthropic intentions. Emissions trading is
community, the UK plans to reduce CO2 emissions sixty percent by important from a business perspective because companies will be
2050 – a reduction driven largely by market based mechanisms forced to act on climate change in and outside of Europe. Increased
including emissions trading. After the implementation of the political will, increased economic necessity, and increasing legal
European Union Emissions Trading Scheme (EU ETS), the first exposure for failure to act will encourage investors to develop stronger
worldwide greenhouse gas emissions (GHG) trading scheme, markets for carbon trading. Lessons learned from the EU ETS
governments, industry and their institutional investors, as well as demonstrate the need for a uniform regulatory system that avoids an
citizens, recognize the economic value and the environmental ad-hoc, patchwork system of regulations. Uniform regulation will
necessity of addressing climate change and the markets that can avoid the re-distribution of market signals and provide a consistent,
encourage emissions reductions. stable market for carbon emissions trading. The net results will be that
business will adjust behaviours and markets will work – what emerges
The United States emits more greenhouse gasses than any country in is a clear expression of a belief in well structured, properly oriented
the world and the US, along with Australia, India, Japan, China, South markets to allocate resources most efficiently.
Korea, commonly referred to as the Asia-Pacific Partnership or AP6,
account for nearly 50% of global GHG emissions output. Following the The panel on Market Structures: Global Carbon Markets made up
example of the UK, the public and private sectors have started to reduce primarily of UK based traders and finance experts analyzed the ETS
greenhouse gas emissions; especially the most difficult to mitigate CO2. and other regulatory frameworks, carbon price drivers, supply and
US-based multinationals are already participating in GHG emissions demand issues and future market dynamics including who is buying
trading as required by their international operations, and an increasing and selling emissions credits and allocations and why. The panel
number of domestic companies trade on the United States’ burgeoning began by discussing fundamentals of emissions trading and provided a
voluntary market. While mandatory federal regulation concerning world overview of the carbon emissions market. The panel noted that
carbon emissions does not currently exist in the United States, many the Kyoto framework expires in 2012 and new frameworks must arise.
companies predict that future regulation is imminent and recognize the New markets must be broad, promote consistency between currencies,
necessity of increasing energy efficiency and reducing carbon emissions. and avoid creating complex system designs that increase transaction
In addition, California passed the Global Warming Solutions Act of 2006 costs. While the current ETS has a forward investment curve, there is
to reduce the state’s GHG emissions by twenty-five percent by 2020. no economic certainty following the expiration of Kyoto in 2012 that
Further, the Regional Greenhouse Gas Initiative (RGGI) allows for a cap allows countries to make investment decisions. The emerging market
and trade program for CO2 emissions in power plants in the Northeast in the United States should consist of a simple, multi-sectoral program
and Mid-Atlantic regions. that recognizes the danger posed by climate change and provides a
solution. As markets continue to emerge and develop, investors must
The conference was supported by the leadership of both American and understand the flow of information between different markets and the
British officials. Mayor Bill White and HM Consul-General Judith Slater interdependency of energy markets i.e. natural gas, coal, etc. which in
welcomed the conference participants and stressed the importance of previous eras were largely discrete and independent of one another.
developing an international relationship that promoted environmental
responsibility and economic sustainability. Mayor White made an
appropriate analogy to other waste stream sequestration problems and
gave a brief history lesson of fresh water resources management in
Nineteenth century Houston and the varying and evolving attitudes
toward the intrinsic and economic value of finite resources.
The next panel entitled Verification, Trading & Reporting: An After determining the impact of the Kyoto Accords on the
Integrated Approach comprised primarily of UK enterprise IT experts international community, the next panel, Rapidly Evolving US Markets
who analyzed the impact of multi-scheme CO2 governance on and Business Climate, provided an update on the Regional Greenhouse
business processes and information technology (IT) systems. The panel Gas Initiative (RGGI), developments and plans for action in California,
concluded overwhelmingly that relying solely on use of homegrown and an overview of federal legislative proposals in the United States.
spreadsheets constituted an ineffective method of managing The future regulation on climate change in the United States is being
compliance in a mission critical business information process like shaped by public perception, environmental and cost predictions, and
carbon accounting. Instead, they stressed the importance of political influence, a federal cap and trade regulatory program is
developing efficient independent assessment procedures for GHG predicted. Current congressional bills discussing climate change
emissions reporting and the adoption of fit for purpose, robust IT legislation address concerns for regulation differently, in respect to
systems well integrated with each firms enterprise resource planning stringency and market-based provisions. Recognizing the regulatory
(ERP) suite and management information systems (MIS). The presenter uncertainty, analysts question whether offset purchases in the United
from London based LogicaCMG provided evidence that 34% of States are premature. However, considering the value of market
internal financial worksheets used for strategic decision making were participants and the steep forward price curve, investors can offset a
corrupted or contained serious flaws. Accurate information is material portion of their physical risk with strategic investments.
paramount from the trader and corporate manager perspective. GHG
emissions could become the largest traded commodity market and With insight into international markets, Vince Kaminski of Rice
effective trading requires an integrated, accurate and robust IT system. University, (formerly of Citigroup and Enron Energy Trading) discussed
The panel concluded with an impassioned appeal for international “Houston’s Role in the Energy Market.” The modern energy market
cooperation to address GHG emissions, which will require effective IT largely involves financial institutions and hedge funds, which hold a
systems rather than vulnerable, one-dimensional spreadsheets. growing interest in commodity markets and commodity investments.
The new emphasis on commodities as an asset class, creates demand
The following speaker, Charles Zimmerman, Vice President, Prototype for risk management, energy trading, and contract structuring skills.
and New Format Development, Wal-Mart Stores Inc, discussed Recognizing this new emphasis and increasing inter-market linkages,
sustainability in a speech entitled “The Evolution of Sustainable Houston provides access to diverse markets, research and educational
Facilities.” Taking the every day low price guarantee they provide to opportunities, and the foundation for a competitive merchant energy
customers, Wal-Mart has adopted the business practice of providing business.
the company with an every day low cost. Leading the country in
business sustainability, Wal-Mart was fifty percent below the Energy Providing an alternate perspective, the final speaker, Jim Yardley,
Policy Act (2005) requirements through their use of processes such as President of Houston based El Paso Pipeline Group discussed “Natural
daylight harvesting, heat reclamation and advanced LED lighting. The Gas in a Carbon Constrained Environment.” Mr Yardley explained
full spectrum of deployable technologies and waste/energy reduction how natural gas provides a bridge between current and future carbon
practices was impressive. Wal-mart was emphatic that these practices mitigation policies because natural gas is the lowest carbon emitting
constituted good business practices and each implementation paid for fossil fuel with the highest efficiency and lowest capital infrastructure
itself within a 6-24 month timeframe. or risk. Moreover, the joint use of a gasification and methanation
process on coal produces pipeline quality gas, which optimizes energy
The panel entitled International Projects: Clean Development security prices and environmental considerations.
Mechanism, Joint Implementation and Beyond consisted of UK
experts in structured finance and project finance who addressed the CONCLUSION
impact of multi-scheme CO2 governance on business processes and Not only has global carbon emissions trading emerged as a profitable
information systems. The panel members explained how the carbon endeavour for companies, investors, and industries, but it is also a
emission trading market has stabilized due to increasing prices and necessary step for national and state governments and the wider
consistent volumes. Managing risk requires the buyer’s due diligence, international community to turn climate change risks into new
portfolio management, and cross-commodity trades. The market opportunities. As a financial commodity, carbon emissions represent a
remains active and is predominated by buyers from private firms in the rapidly growing international market worth over $30 billion. Houston,
EU and sellers from China’s CDM market. While the activity of the the world’s energy capital, has a long history of innovation in energy
carbon trading market is no longer questioned, the market presents markets that uniquely positions the City to leverage the next wave of
new considerations. No longer presenting an uneven bargaining opportunities in rapidly developing carbon markets.
position, the carbon trading market offers flexible terms, solid pricing,
and contract profit sharing between the buyer and seller. The
international market, with China, India, and Brazil at the forefront,
requires a portfolio approach and expertise of the country’s specific
technology and market allowances. For offset project developers, the
Kyoto protocol and CDM have provided an important framework and
base of knowledge supporting improved project technology and
diversification. Despite the success of CDM, however, challenges
persist relating to the speed of market based mechanisms.
EMERGING OPPORTUNITIES IN GLOBAL CARBON Mayor Bill White made an appropriate analogy to waste stream
EMISSIONS TRADING: sequestration problems and gave a brief history lesson of fresh water
resources management in nineteenth-century Houston and the
CREATING VALUE, MANAGING RISK
varying and evolving attitudes toward the intrinsic and economic
Background value of finite resources.
UK Trade & Investment at the British Consulate-General Houston and
the Greater Houston Partnership hosted a conference on Carbon In his presentation entitled “Investing in the Response to Climate
Emissions Trading in Houston, Texas. The conference, “Emerging Change,” James Cameron, Vice Chairman of London-based Climate
Opportunities in Global Carbon Emissions Trading: Creating Value, Change Capital, highlighted one of the conference’s major themes—
Managing Risk,” addressed how current emissions trading systems are market forces provide the most efficient response to climate
creating business opportunities, fostering innovation and technology change. Mr. Cameron emphasized that “climate change is an
development, and influencing global financial systems. The energy problem and energy is an infrastructure problem.” To satisfy
international market for carbon emissions trading is currently worth global energy needs, an infrastructure must be developed that
approximately $30 billion, and experts predict that the carbon market promotes economic profitability and environmental sustainability in
will reach $150 billion by 2012. the face of finite resources.
London’s position as the epicentre for carbon emissions trading, Citing the Stern Review on the Economics of Climate Change1 and the
coupled with Houston’s international energy expertise, highlighted Carbon Disclosure Project (CDP)2, Mr. Cameron analyzed how the
the conference’s objectives of encouraging the continued innovation debate over climate change has transitioned from science, to policy
of energy markets and developments in carbon finance. Houston has and now to investment. The Stern Review, a report conducted by
the potential to become a key global partner to London and an economist Sir Nicholas Stern for the British government, concluded
industry leader for carbon trading in the United States as domestic that GHGs could be reduced cost-effectively and the cost of inaction
markets develop. was too high to contemplate further delay. Further, the CDP, a non-
profit venture with international support, has created a remarkable
Recognizing the harmful effects of climate change upon the global coalition of investors that requests corporations to report GHG
community, the U.K. plans to reduce CO2 emissions sixty percent by emissions. Both the Stern Review and the CDP reflect the belief that
2050—a reduction driven largely by market based mechanisms robust markets must continue to develop and allow investors to make
including emissions trading. After the implementation of the long-term decisions based on the price of carbon. Investors are
European Union Emissions Trading Scheme (EU ETS), the first interested in making long-term commitments in the emerging carbon
worldwide greenhouse gas (GHG) emissions trading scheme, market, and as awareness of the value of carbon increases, the market
governments, industry and their institutional investors, as well as will grow and diversify.
citizens, recognize the economic value and the environmental
necessity of both emissions reductions and trading. Mr. Cameron also acknowledged the relationship between carbon
markets and coal production. Coal production and consumption
The United States emits more greenhouse gasses than any country in represents a powerful force in the energy world. The energy
the world and the US along with Australia, India, Japan, China, demand will continue to be met with coal, leading to an increased
South Korea, commonly referred to as the Asia-Pacific Partnership or risk from the effects of global warming. While coal provides an
AP6, account for nearly 50% of global GHG emissions output. abundant and relatively cheap energy source, coal consumption
Following the example of the UK, the public and private sectors have produces high hidden costs. In response, investors should
started to reduce greenhouse gas emissions; especially the most recognize this opportunity and invest in carbon capture and
difficult to mitigate CO2. US-based multinationals are already sequestration. Mr. Cameron’s discussion on coal production and
participating in GHG emissions trading as required by their emerging markets emphasized that carbon markets must not be
international operations, and an increasing number of domestic government controlled. Rather, carbon pricing and management
companies trade on the United States’ burgeoning voluntary market. of carbon must become an essential component of economic
While mandatory federal regulation concerning carbon emissions management in all countries. Carbon markets provide the
does not currently exist in the United States, many companies predict necessary market based system to support environmental
that future regulation is imminent and recognize the necessity of protection and economic growth.
increasing energy efficiency and reducing carbon emissions. In
addition, California passed the Global Warming Solutions Act of 2006 The next presenter highlighted the business opportunities provided by
to reduce the state’s GHG emissions by twenty-five percent by 2020. carbon emissions trading in Kyoto and non-Kyoto markets.
Further, the Regional Greenhouse Gas Initiative (RGGI) allows for a Dr. Leonhard Birnbaum, a Düsseldorf-based McKinsey Director,
cap and trade program for CO2 emissions in power plants in the presented “Emissions Trading from a Business Perspective” and
Northeast and Mid-Atlantic regions. concluded that carbon trading was a business necessity.
The conference was supported by the leadership of both American
HM TREASURY, STERN REVIEW ON THE ECONOMICS OF CLIMATE CHANGE (2007),
and British officials. Mayor Bill White and HM Consul-General Judith
available at http:// http://www.hm-
Slater welcomed the conference participants and stressed the treasury.gov.uk/independent_reviews/stern_review_economics_climate_change/sternreview_
importance of developing an international relationship that promoted index.cfm.
environmental responsibility and economic sustainability. 2
Carbon Disclosure Project, http://www.cdproject.net (last visited Feb. 5, 2007).
Dr. Birnbaum focused on the short-term driving forces of the Like other conference presenters, Mr. Carter recognized the value of
international carbon market and potential hazards emerging markets the European carbon market, but required increased transparency,
must avoid. increased transactional efficiency, and more predictable investment
outcomes. As the carbon market in the United States develops, Mr.
Climate change can and should be addressed completely absent Carter called for the adoption of an efficient market with federal
philanthropic intentions. Emissions trading is important from a controls. Any GHG legislation in the Untied States should rely on
business perspective because companies will be forced to act on market efficiencies to minimize social and economic costs while
climate change in and outside of Europe. Increased political will, maximizing effectiveness of the trading program. Further, lawmakers
increased economic necessity, and increased legal exposure for failure should look to state initiatives regarding GHG emissions trading, such
to act will encourage investors to develop stronger markets for as the RGGI and the California Clear Air Initiative, but only to create a
carbon trading and low carbon technologies. According to Dr. federal system. Mr. Carter supported Dr. Birnbaum’s position that a
Birnbaum, there is money to be made whether or not a country is a federal system is superior to a state system. Uniformity fosters
Kyoto signatory. certainty and will increase investor confidence in new carbon markets.
Dr. Birnbaum recognized several challenges facing emissions trading Mr. Carter also provided several warnings to proponents of carbon
schemes and suggested ways to increase the effectiveness of trading in the United States. First, the market must be simple—
burgeoning markets in the United States. A successful emissions lawmakers must resist the temptation to over-engineer the market.
trading program must achieve emission reductions for the lowest cost Next, safety valves must be in place to provide access to a liquid
without distributional issues. To achieve reductions, the trading market with an abundant supply of offsets. In addition, the market
program must recognize total emissions in a trading sector. To should be built and assessed with realistic expectations, and other
minimize the cost of a carbon market, the trading program should policy measures may be required to achieve results in the necessary
create investment certainty, exclude very small assets, and create a time frame.
proper scope of investment. In addition, the trading system should
recognize competitiveness issues by encouraging cross border The next panelist, London-based Toby Campbell-Colquhoun, an
taxation, production based allocations with benchmarking, and global Environmental Products Trader for Shell Trading, analyzed the current
agreements. A uniform regulatory system will avoid an ad-hoc, trading scheme from a trader’s perspective in a presentation entitled
patchwork system of regulations. Uniform regulation will also avoid “EU ETS – Lessons Learned”. The ETS received high marks for its
the re-distribution of market signals and provide a consistent, stable relatively high volume of trades, depth and liquidity, low transaction
market for carbon emissions trading. What emerges is a belief in costs, and the expanding number of products available to trade on
well-structured and properly oriented markets to allocate resources the market. Mr. Campbell-Colquhoun stated that up to four million
most efficiently. allowances were traded daily on the market and numerous institutions
were engaged in the trading. The market contains a significant
The panel on Market Structures: Global Carbon Markets, made up number of liquidity providers including investment banks and hedge
primarily of UK-based traders and finance experts, analyzed the funds. In addition, transaction costs were reasonable and did not
European Union Emissions Trading Scheme (EU ETS) and other offer a significant impediment to trade. Numerous products traded
regulatory frameworks. They also examined carbon price drivers, frequently on the market and interacted well with other traded
supply and demand issues, and future market dynamics, including products such as power, gas, and coal. Also, the market provided an
who is buying and selling emissions credits and allocations and why. adequate mechanism for verification, monitoring, and validation.
The panel was chaired by Mark Proegler, Director of BP’s Emissions
Markets Group. He discussed the fundamentals of emissions trading Mr. Campbell-Colquhoun highlighted areas where the ETS could
and provided a world overview of the carbon emissions market. Mr. improve, including the need for increased transparency, better real
Proegler noted that emerging markets must adopt a global approach time price information and the prompt release of compliance
and create a product-based mechanism that will in turn create information, thereby allowing traders to take advantage of the
emissions credits through emissions reductions. According to a World market’s volatility. Further, the ETS must link with the flexible
Bank study, the current value of the carbon market doubled from mechanisms encouraged by the Kyoto Protocol, such as the Clean
2005 and currently totals $22 billion. Although a global market is Development Mechanism (CDM) and Joint Implementation (JI), and
emerging, Mr. Proegler noted that markets require regulatory and price fully integrate with a global market. Finally, Mr. Campbell-Colquhoun
certainty to encourage additional investment. Furthermore, he called cautioned that Kyoto’s expiration in 2012 limited the certainty of the
for a comprehensive examination to correct the existence of windfall market’s forward price curve. Although a forward price curve currently
profits. Mr. Proegler concluded his presentation with a call for a exists and traders can trade on a forward basis for two or three years
global solution to GHG emissions by harmonizing markets as they past Kyoto’s expiration, investors must obtain greater certainty to
grow with other technological changes. continue the forward curve further.
Ian Carter, the North American Policy Coordinator for the International In conclusion, Mr. Campbell-Colquhoun explained that a deep, liquid,
Emissions Trading Association (IETA), addressed key challenges facing and efficient market allows companies to formulate and execute
the creation of a global carbon market. Mr. Carter’s presentation, economically rational investment decisions. After all, creating a stable
“Emerging Opportunities in Global Carbon Emissions Trading,” briefly regulatory regime provides companies with the confidence to commit
analyzed the ETS and provided guidance to the emerging carbon to long-term investments to reduce and moderate GHG emissions.
market in the United States.
Mason Henderson, Manager for Cantor Fitzgerald Brokerage, offered The next panel entitled Verification, Trading & Reporting: An
insight derived from the SO2 and NO2 market in the United States Integrated Approach comprised of primarily UK enterprise IT
that should be applied to burgeoning carbon markets. His experts. The panel analyzed the impact of multi-scheme CO2
presentation, “Lessons Learned: U.S. Offset and Cap & Trade governance on business processes and IT systems. The panel
Experiences,” began with a simple, yet resounding call for the concluded overwhelmingly that relying solely on the use of
government to assume leadership, recognize the problem posed by home-grown spreadsheets constituted an ineffective method of
GHG emissions, and commit to solve it. A successful market must be managing compliance in a critical business information process like
simple in purpose—reduce GHG emissions—and simple in method— carbon accounting.
submit carbon allowances or cut emissions output. Further, the
trading program must be based on an accurate, reliable emissions Mark Earthey, Vice President of Product Management-Europe for
inventory that works effectively from its inception. The trading SunGard Energy Solutions, briefly introduced the panel by calling for
scheme should be mass-based rather than rate- or heat-based, and robust IT systems that calculate emissions properly. The first presenter,
sources of GHG emissions must be incorporated into the scheme to Wilhem Wang, Certified EMS Lead Auditor and a BSI Management
create a viable solution. The trading scheme must establish clear rules System Marketing Manager in the Sustainability group, began his
and regulations at the outset to encourage compliance. And as long presentation, “Why Another Pair of Eyes? The Need and Value of
as companies satisfy the scheme’s goals, the regulations should not be Independent Assessment,” by asking a rhetorical question: “Why do
adjusted. Companies must be held to annual or bi-annual compliance Americans care about GHG emissions—particularly without a
obligations and penalties must be imposed for noncompliance: there regulatory system?” Mr. Wang believed increased public awareness of
must be a fate worse than noncompliance. Mr. Henderson the effect of GHG emissions in the United States during the past
encouraged emerging carbon markets to adopt existing infrastructure twelve months and increased awareness of potential risk of public
embedded in local air pollution control districts. Local regulators liability from the business sector has caused Americans to care.
should be vested with the authority to run, operate, monitor, and Indeed, many experts believe that companies that choose to ignore
inspect those facilities subject to GHG regulations. the risk of global warming may incur the same fate as those
companies that chose to ignore the consequences posed by the health
Noting some of the inefficiencies in the NO2 and SO2 trading scheme, risks of asbestos.
Mr. Henderson explained that end users, rather than market
speculators, must receive the allowances. Otherwise, companies will be Industries producing the most significant GHG emissions—energy
less inclined to participate in the program. Further, new carbon generators, oil and gas, manufacturing and transportation—must
trading schemes need to be uniform to avoid leakage and prevent recognize the need for independent assessment. Mr. Wang defined
companies from relocating to jurisdictions with less stringent or the unique considerations inherent in independent, third-party
cheaper compliance costs. validation mechanisms. Emissions validation serves to assess the
project design’s baseline, monitoring plan, and the project’s
Guy Turner, a London-based Director of New Carbon Finance, compliance with the United Nations Framework Convention on
concluded the first panel’s discussion with his presentation, “Prices Climate Change (UNFCCC) and host party criteria. In addition,
and Investment Opportunities in Carbon Markets”. Mr. Turner validation provides assurances to the project stakeholders that the
underscored his presentation by acknowledging the complex nature of project will generate certified emission reductions (CERs). Further, CER
the carbon market. The carbon market is difficult to forecast verification serves to verify that the project is implemented according
accurately because it is affected by many factors including politics, to plan, confirms the existence of a functional monitoring plan, and
weather patterns, and fuel prices. Therefore, it is imperative to assures that the project will generate verifiable emissions reductions.
understand the linkage between markets. The primary driver of
carbon price is the balance of supply and demand. The supply side is Mr. Wang then analyzed the value provided by independent
driven by abatement opportunities, such as cement and glass assessment. Not only will independent assessment enhance the
production. In certain situations, it will become cheaper to shut down project’s credibility, transparency, and stakeholder communication, but
operations and sell carbon emissions credits rather than continue it will also provide accurate reporting of GHG inventory and emissions
production. reduction realization. In addition, independent assessment will
identify opportunities for system management improvement.
On the demand side, the main driver is the degree to which global Currently, voluntary GHG emissions reporting and management
credits can be incorporated into the global trading scheme. The mechanisms are active, but limited, in the United States. However, the
carbon market, like all markets, is not completely efficient. Buyers Supreme Court of the United States granted certiorari to review the
buy at various times, but sellers will only sell when they are absolutely D.C. Circuit’s decision in Massachusetts v. EPA and heard arguments in
certain that they will have credits to sell. Seller risk aversion will likely October 2006. The Court’s decision could accelerate the imposition of
continue to throw the supply and demand curve off balance and a mandatory framework regulating GHG emissions. With the
affect carbon prices. Although the carbon market does have possibility of United States regulatory frameworks on the rise, it is
inefficiencies and externalities, fifty-one funds are dedicated to important to create a systematic approach to GHG management—
investing in carbon assets. In 2006, money invested in carbon emissions reductions, inventory reporting, and credit generation—to
vehicles totalled $5.8 billion. To reach reductions set forth in the provide a holistic framework that will unlock the value of
Kyoto Protocol, however, approximately $25 billion would have to be environmental improvement.
invested. Mr. Turner concluded that while London was the current
epicentre of carbon trading and wealth management, the market
center could shift to the United States.
Next, Craig Windram, Director and Founder of E3 Europe, presented Prioritizing business profitability through environmental maneuvers
“Emissions Compliance, Trading & Reporting: An Integrated has undoubtedly been successful for an international retailer—Wal-
Approach.” Mr. Windram exposed the errors and inefficiencies Mart. Keynote speaker, Charles Zimmerman, Vice-President of
produced by relying solely on Excel spreadsheets to track emissions Prototype & New Format Development at Wal-Mart Stores Inc.,
compliance. In short, the use of the spreadsheet is incomplete, out of discussed “The Continuing Evolution of Sustainable Facilities at Wal-
date, inaccurate, difficult to maintain, expensive to audit, inaccessible, Mart.” Taking the every day low price guarantee they provide to
and insecure. Indeed, thirty percent of company spreadsheets contain customers, Wal-Mart has expanded the credo and adopted the
errors that go unreported, even after internal audits. Mr. Windram business practice of providing the company with an every day low
noted that the majority of spreadsheet supported emissions cost. Wal-Mart stores in the United States lead the international
compliance systems evolved in piecemeal fashion and are susceptible community in energy efficiency and surpass energy use requirements
to data duplication and error. Further, spreadsheets create a of the Energy Policy Act (2005) by fifty percent.
disconnect between operations and corporate decisions causing
managers to lose their oversight ability to monitor emissions liabilities, The company remains committed to business sustainability with their
assets and compliance positions. Accurate reporting and monitoring continued goal to reduce energy consumption. Indeed, the company
affects mark-to-market valuation of allowances which, in turn, directly set, and will likely achieve, a goal to reduce energy consumption by
affects a company’s balance sheet and profit and loss statement. twenty percent in seven years. Using techniques like daylight
Lastly, regulators and investors are demanding that managers provide harvesting, white roofs, and sunroofs, Wal-Mart stores are able to
greater transparency and accountability—a request the spreadsheet employ natural sunlight to illuminate their stores. Heat reclamation is
cannot provide. In conclusion, Mr. Windram encouraged managers to also utilized to reuse the heat emitted from refrigeration units for
review current reporting systems and assess their fitness. other purposes such as heating water. The energy usage of the
refrigeration units is further enhanced by adding doors to the display
Mr. Earthey then addressed the effects reporting errors posed to cases, installing LED lights, and motion sensors to turn on
traders in his presentation entitled, “Reporting & Verification refrigeration unit lights.
Information Systems—A Trader’s Perspective of the Requirements.”
Accurate information is paramount from a trader and corporate Wal-Mart continues to improve the sustainability of their stores by
manager perspective,. GHG emissions could become the largest traded researching the feasibility of rainwater harvesting, domestic water
commodity market, and effective trading requires an integrated, consumption, construction debris recycling, and increasing the use of
accurate and robust IT system. Inaccurate information affects the recycled products. Wal-Mart continues to have ongoing discussions
trader in numerous ways. The poor dissemination of information with competitors to reduce energy costs nationwide.
resulting from faulty reporting can cause traders to act on inaccurate
information and suffer significant losses. Traders can face fines for Following Mr. Zimmerman’s thought provoking discussion, the next
noncompliance and suffer from bad publicity that will encourage panel addressed International Projects: Clean Development
others not to trade. Despite these problems, trading can be highly Mechanism, Joint Implementation and Beyond. The panel offered
profitable and emissions trading should not be an exception. To insight into ways to enhance the capacity and ability of firms to
develop a robust carbon market, verification and reporting must be accurately match carbon exposures through investment in the most
improved upon. active clean development and joint implementation markets.
Mr. Earthey outlined several general requirements for effective
A representative from the Sustainable Development Department at
emissions trading. First, the system must be dynamic, flexible, and
the World Bank, Chandra Shekhar Sinha, spoke on “International
able to calculate emissions liabilities under applicable scheme rules.
Projects: Clean Development Mechanism, Joint Implementation and
Emissions trading must also capture actual emissions and meet
Beyond.” Mr. Sinha identified the structure of the market in 2006
reporting obligations. Mr. Earthey concluded by explaining that
as predominated by the carbon allowance market, particularly, the
emissions trading involves many interlinked business processes. In
ETS. The market indicates a trend of market value doubling in
order to capture opportunities to combine profit and compliance,
2006. As carbon develops as a financial trading market, the growth
effective trading demands an integrated IT system.
of the project-based market will stabilize. From 1998 until
Lastly, Francois Dauphin, Environmental Offering Director for Logica November 2006, the volumes have stabilized and the price of carbon
CMG, concluded the second panel with an impassioned appeal for has continued to increase.
international cooperation to address GHG emissions with effective IT
systems rather than through vulnerable, one-dimensional spreadsheets. When entering the market, the fixed forward primary CER transactions
Mr. Dauphin stated plainly that CO2 should be viewed as money. As dominate and secondary markets emerge as more CERs are issued.
such, regulations for GHG emissions will continue to develop and For buyers, reliance on their due diligence rather than sellers’
systems need to develop a clear strategy to combat global warming guarantees for delivery is necessary because upfront payments are rare
effectively and economically. and payments are made at agreed target points. To manage risk,
buyers should ensure portfolio management and cross-commodity
After discussing existing international carbon trading markets and the trades, and utilize emerging insurance projects. Currently, buyers of
role of governance and information systems on business processes, market shares are predominately private firms from the EU, while
there was also resounding support for investing in the carbon market sellers in the CDM market share are mostly from China.
irrespective of mandatory regulatory requirements. While concerns The World Bank has been involved in carbon finance since the late
remain, the carbon market has proven to be environmentally 1990s. In 1997, the prototypical carbon fund was initiated with a
important and profitable for businesses. $100 million investment that capitalized at $180 million.
The second phase of their initiative was consolidation followed by the Politically, there are many different proposals, notably the Liberman-
current phase of identifying the value-added in the carbon market. McCain, Bingaman and Boxer bills. It is possible that the new
regulatory system will involve diverse sectors including electric power
After surveying the multi-phased efforts of the World Bank, Ricardo generation, petrochemical plants, refineries, and transportation. The
Nogueira from Trading Emissions, PLC, discussed “Clean Development national system will likely include a federal cap and trade program.
Mechanism – Where are we now?” Mr. Nogueira explained that the Although the likelihood of immediate industry response is unknown,
carbon market was no longer an absolute buyer’s market. Instead, an industry might lose out on an opportunity or bragging rights by
the carbon market represented a deal structure with variety, flexibility, not responding.
and equity. The market has matured with increased information
flow, transparency, and increasing success rates. With China, India, Professor Flatt’s views on the current status and future possibilities of
and Brazil at the forefront, the international market requires a carbon regulation provided an appropriate segway into Kyle Danish’s
portfolio approach and expertise of the country’s technology and analysis of current legislation in his presentation entitled “US Policy
market allowances. and the US Carbon Markets.”
Yet, an international market poses international problems. Project Mr. Danish, an attorney with Van Ness Feldman, addressed the
risks include project maturity, technology limitations, underlying increasing probability of GHG regulation in the United States due to
business concerns, size and risk of controversy. With unreliable Democratic control of Congress, bipartisan interest, state activity,
guarantees, buyers can assess risk by spreading out their portfolio and the discussion shift “from if, to how, to regulate.” In these next
through diverse technologies, project types, and geographies. steps of determining how to regulate, the policy design will
determine the market.
The market’s success, maturity, and problems were further discussed
by Andy Dvoracek, from EcoSecurities. Mr. Dvoracek discussed the The stringency of the regulation and whether the regulation will
CDM as a robust market supporting large scale emissions reductions. be market based will need to be determined for future regulation.
The Kyoto Protocol and CDM provided a foundation for the If the regulation will be market-based, it will be shaped by such
development of an important framework and base of knowledge for initiatives as California’s experience with market-based approaches
offset project developers. In the United States, recent initiatives, such and Governor Schwarzenegger’s Market Advisory Committee.
as RGGI, California's AB 32, and the voluntary Chicago Climate However, the stringency determination for emissions will be
Exchange (CCX), have developed. shaped by competing legislator’s proposals.
Despite the success of CDM, challenges persist due to the speed of Mr. Danish recognized that the question of how much of the
market based mechanisms. Without a long-term policy, there will not economy will be regulated would need to be determined.
be a long-term drive to act. Greater responsiveness and transparency Different legislators and current state programs in California and
are important to support the market. Currently, there is no direct the Northeast, will provide a landscape to determine if coverage
interaction between project developers and regulators, nor a balance will involve only the electric power sector or economy-wide
between environmental integrity and red tape. Despite these coverage. However, Mr. Danish recognized that less than
challenges, Mr. Dvoracek recognized that the absence of policy, policy economy-wide coverage will lead to smaller allowance markets
blunders and our imaginations are the only limitations to climate and larger offset markets.
Additionally, the current proposals of McCain-Lieberman and
After understanding the impact of the Kyoto Accords on the
Bingaman address a wide range of industries including coal
international community, the next panel entitled Rapidly Evolving US
mining, petroleum refineries and other facilities. The proposals
Markets and Business Climate, discussed the RGGI, developments and
also address cost control measures such as borrowing and
plans for action in California, and an overview of legislative proposals
in the United States.
After surveying the future and direction of possible legislation,
Professor Victor Flatt, the A.L. O’Quinn Chair in Environmental Law at
Greg Spencer of Blue Source discussed “Carbon Offset Purchases:
the University of Houston Law Center, addressed “Climate Change and
Prudent or Premature.” Regulatory uncertainty in the United
Federal Regulation.” Regulations on the horizon will be shaped by
States is causing many analysts to question whether offset
perceptions of climate change induced environmental degradation,
purchases are premature, but with pending legislation on the
predictions as to temperature changes and their effects, predictions to
horizon, they may in fact be prudent.
the cost of action and political influence. The current regulatory
response involves an E.U. cap and trade program, funding for
Offset purchases can be viewed as premature considering the loss of
renewable energy, state and city programs, and a voluntary industry
investment for early action, offset criteria, counterparty delivery risks,
response. Public opinion is changing greatly and regulation will
and regulatory uncertainty. Yet, offset purchases actualize with
occur—possibly as early as 2008.
market participants receiving value and the steep forward price curve.
The annual price appreciation has been more than 100% in the last
A future federal regulatory system will be shaped by existing GHG
three years, and the price curve has forecasted 40% annual
regulations and the current political process. From the power plant
appreciation for the next eight years.
cap and trade program in the Northeast to mandatory power plant
CO2 controls, models will be evaluated to establish the federal
Regardless of the prudency or prematureness debate, Mr. Spencer Texas companies have been involved in initiatives to reduce carbon
recommends managing the risk. Buyers can offset a material emissions. Jim Yardley, President of the Pipeline Group with El Paso
portion of the physical risk with multiple projects, verified offsets, Corporation, gave a presentation entitled “Natural Gas Industry in a
and firm option structures. Moreover, strategic investments are Carbon Restrained Environment.” Mr. Yardley explained how natural
important to hedge financial risks through equity, project or gas is a carbon restrained industry. Natural gas is the lowest carbon
technology investments. intensity emitting fossil fuel and offers the highest efficiency and
lowest capital infrastructure or risk. These factors lead to a
With insights in current U.S. activity in the carbon market, Professor “breakeven fuel price premium,” compared with energy prices, carbon
Vincent Kaminski, from Rice University, localized the discussion to taxes, and high construction prices. The joint use of a gasification
Houston in his presentation, “Houston’s Role in Energy Markets.” and methanation process on coal produces pipeline quality gas and
With his experiences in the energy market and academia, Professor energy security prices are optimized along with environmental
Kaminski provided an overview of modern energy markets. Energy considerations. Natural gas presents a "bridge" in the face of
markets are rapidly evolving following the deregulation of the natural technology and regulatory uncertainty. Mr. Yardley identified
gas and electricity markets in the United States. Increasing additional greenhouse gas and air quality commitments El Paso
globalization and the integration of energy markets is causing an Corporation has begun as avenues to reduce carbon emissions.
increased demand for trading, risk management, and financial
engineering professionals. Not only has global carbon emissions trading emerged as a
profitable endeavor for companies, investors, and industries, but it
The modern energy market largely involves financial institutions and is also a necessary step for national and state governments and the
hedge funds. Since the crisis in the merchant energy business in wider international community to turn climate chance risks into
2002, financial institutions and hedge funds emerged as a new class new opportunities.
of players using diverse business models. More than ever, financial
institutions look to commodities as an asset class likely due to As a financial commodity, carbon emissions represent a rapidly
shrinking profit margins in traditional business lines, a constant quest growing international market worth over $30 billion. Houston, the
for diversification, and growing imbalances and distortions in the world’s energy capital, has a long history of innovation in energy
world economy. Volatile energy prices are creating a market demand markets that uniquely positions the City to leverage the next wave of
for risk management and contract structuring skills. The inter-market opportunities in rapidly developing carbon markets.
linkages, between commodities such as electricity, natural gas, and
coal, are becoming more integrated geographically. Throughout the Conference, the presenters expressed their confidence
in market forces. The conference demonstrated that the
As such, Houston’s educational emphasis on energy markets research infrastructure, knowledge, and capital are available for proponents of
should be capitalized. Programs at Rice University's Jesse H. Jones a carbon trading market. As a global carbon market continues to
Graduates School of Management and the University of Houston, develop, the dialogue initiated at the Greater Houston Partnership and
Bauer College of Business, and the Center for Energy Economics at UK Trade & Investment conference on Carbon Emissions Trading will
the University of Texas at Austin establish a large pool of talent in help to encourage the market to strengthen and mature.
Houston. As for the future of energy trading in Houston, in the last
five years Houston has made significant progress in recovering its role
in the energy trading and merchant energy business.
BP BP is one of the world’s largest energy companies, providing its customers with fuel for
transportation and energy for heat and light. BP employs more than 100,000 people worldwide
and more than 35,000 in the United States. BP’s family of brands includes Amoco, Aral, ARCO,
BP and Castrol.
BP is also among the world’s most progressive large enterprises. The first major energy
company to acknowledge the need for precautionary action to reduce greenhouse gas
emissions, today BP continues to lead the effort to meet the world’s growing demand for
sustainable, environmentally responsible energy.
SUNGARD ENERGY SOLUTIONS In the energy sector, SunGard provides integrated solutions that enable energy companies to
more efficiently and profitably trade and market energy, process transactions, manage risk, and
optimize operational and financial decisions. SunGard serves over 200 major energy market
participants across North America and Europe, including utilities, power generating companies,
energy traders and marketers, gas producers, pipelines, distribution companies, and public
agencies. SunGard possesses leading energy solutions and industry expertise that companies
need to address the current and future challenges of today's energy markets.
VAN NESS FELDMAN Van Ness Feldman is a law and policy firm concentrating in energy, environment, and natural
resources matters. Founded in 1977, the firm now has more than 80 attorneys and public policy
professionals, many of whom served as chief legal counsel to key congressional committees and
Members of Congress and as high-level officials in key agencies of the United States
government. Van Ness Feldman was among the first law firms to recognize the emerging issue
of climate change and establish a substantial, dedicated practice in the area. The firm provides
strategic advice to clients that are climate change leaders in a range of sectors, including: natural
gas pipelines, electric power, automobile manufacturing, and minerals and metals. Van Ness
Feldman also has a very active practice in emissions trading, providing legal counsel on Clean
Development Mechanism and Joint Implementation transactions under the Kyoto Protocol, as
well as for transactions in the US voluntary markets. The firm’s emissions trading clients range
from the “carbon fund” for the country of Switzerland to an entity that invests in offset projects
for a group of over twenty US utility companies.
MCKINSEY & COMPANY McKinsey & Company is a privately owned management consulting firm that focuses on solving
issues of concern to senior management in large corporations and organizations. Today
McKinsey has over 7,500 consultants in 84 offices across 45 countries. They help solve strategic,
organizational, operational and technological problems, for some of the world's largest
organizations. Clients include three of the world's five largest companies, two-thirds of the
Fortune 1000, governments and other non-profit institutions. McKinsey also performs pro bono
engagements for a number of charitable organizations and government agencies worldwide.
THE CARBON CAPTURE & The Carbon Capture & Storage Association (CCSA) exists to represent the interests of its
STORAGE ASSOCIATION (CCSA) members in the business of capture and geological storage of carbon dioxide (known as
Carbon Capture and Storage, or CCS) as a means of abating atmospheric emissions of
carbon dioxide and, potentially, as a means of enhancing the production of fossil
hydrocarbons. From its base in London the Carbon Capture & Storage Association brings
together specialist companies in manufacturing & processing, power generation,
engineering & contracting, oil, gas & minerals as well as a wide range of support
services to the energy sector such as law, banking, consultancy and project
management. The Association is a model for sectoral cooperation in business
development and its existence is welcomed by government.
CENTER FOR ENERGY Center for Energy Economics, Bureau of Economic Geology, The University of Texas at
ECONOMICS, BUREAU OF Austin educates stakeholders on energy economics and commercial frameworks using
comparitive research to facilitate energy development. We work to help prepare energy
ECONOMIC GEOLOGY, THE industry managers and their legal advisors and government policy makers and regulators
UNIVERSITY OF TEXAS AT AUSTIN for more competitive global energy markets. Our research focus is on frameworks for
commercially viable energy projects and the business-government interface.
THE CITY OF LONDON The City of London provides local government services for the financial and commercial
heart of Britain, the 'Square Mile'. It is committed to maintaining and enhancing the
status of the business City as the world's leading international financial and business
centre through the policies it pursues and the high standard of services it provides. Its
responsibilities extend far beyond the City boundaries in that it also provides a host of
additional facilities for the benefit of the nation. These range from open spaces such as
Epping Forest and Hampstead Heath to the famous Barbican Arts Centre.
The City of London combines its ancient traditions and ceremonial functions with the
role of a modern and efficient local authority, looking after the needs of its residents,
businesses and over 320,000 people who come to work in the 'Square Mile' every day.
Among local authorities the City of London is unique; not only is it the oldest in the
country but it operates on a non-party political basis through its Lord Mayor, Aldermen
and members of the Court of Common Council. The Lord Mayor in particular plays an
important diplomatic role with his overseas visits and functions at the historic Guildhall
and Mansion House for visiting heads of State.
The City of London is committed to an extensive programme of activities designed to
assist its neighbours to combat social deprivation so that they can benefit from the
wealth the 'Square Mile' generates. Staff and members of the City of London have,
through centuries of careful stewardship, ensured that the 'Square Mile' has continued
to thrive. Today's City of London, through its philosophy of sustainable development,
aims to share these benefits with future generations of residents, businesses and workers.
CLIMATE WEDGE Climate Wedge Ltd Oy has partnered with Cheyne Capital Management Ltd, one of the
world’s leading hedge fund management companies, to offer a large source of high-
quality voluntary emissions reductions to companies wishing to offer carbon offset
products and services to their customers or offset their direct emissions. Climate Wedge
aims to drive and support novel ways in which robust offsets can be used and
recognized as a meaningful response option to mitigating corporate GHG emissions
across all sectors and regions.
ELEMENT MARKETS Element Markets utilizes the foremost market intelligence on emission and renewable
energy credits to facilitate strategic financial transactions and develop unique
capitalization for clean energy technologies.
Element Markets LLC was founded in 2004 by a collection of senior managers with
backgrounds ranging from power and gas to emissions/renewable brokerage and grain
trading. Our goal is to ensure that environmental assets, liabilities, and trading strategies
are managed at their optimum commercial level over a long-term basis. Our clients
range from municipalities to Fortune 100 companies. We pride ourselves on our integrity
and service, and we provide companies with customized solutions to meet their
emissions, renewable, or technology needs.
HARC HARC is a not-for-profit organization based in The Woodlands, Texas dedicated to
improving human and ecosystem well-being through the application of sustainability
science and principles of sustainable development. HARC's mission is to move
knowledge to action to improve human well-being and the environment.
HARC is a mission-focused sponsored research organization In a non-partisan and
collaborative manner, HARC is a conduit from basic research to action that fosters the
implementation of policies and technologies based on rigorous principles of social
science, natural science, and engineering. HARC's research themes support sustainability
solutions in ecosystems, water, air & climate, clean energy, the built environment, and
HOUSTON TECHNOLOGY CENTER Houston Technology Center (HTC), A non-profit 501(c)(3) corporation, is Houston’s
(HTC) business accelerator and the largest technology business incubator in Texas. HTC
accelerates the commercialization of emerging technology companies in Houston by
providing in-depth business guidance, access to capital and service providers, and
entrepreneurial education. Additionally, HTC promotes Houston’s technology successes
to enhance its position as a leading technology city and educates entrepreneurs and the
underserved communities of Houston. Supported by more than 300 corporations and
organizations, Houston's leading academic institutions, the Greater Houston Partnership,
the Texas Medical Center, NASA-Johnson Space Center, and the City of Houston, HTC
has become the center of technology entrepreneurship by assisting more than 200
companies within several key sectors: Energy, Information Technology, Life Sciences,
Nanotechnology, and NASA-originated technologies.
THE INTERNATIONAL EMISSIONS The International Emissions Trading Association (IETA) is a non-profit organization
TRADING ASSOCIATION (IETA) created in June 1999 to establish a functional international framework for trading
greenhouse gas emission reductions. Their membership includes leading international
companies from across the carbon trading cycle. IETA members seek to develop an
emissions trading regime that results in real and verifiable greenhouse gas emission
reductions, balancing economic efficiency with environmental integrity and social equity.
As of November 2005 the IETA comprises more than 110 international companies from
OECD and non-OECD countries. IETA has formed several partnerships such as with the
World Bank and Eurelectric.
THE JESSE H. JONES GRADUATE The Jesse H. Jones Graduate School of Management is one of the world's leading
SCHOOL OF MANAGEMENT business schools. Founded in 1974, it is already among the top five percent of business
schools. Its MBA and MBA for Executives programs were ranked the best in Texas and
the Southwest by the Financial Times in 2004 and 2005. The school offers the Rice
MBA, MBA for Executives, MBA for Professionals degrees as well as the following joint
degrees: Joint MBA/ME with the George R. Brown School of Engineering and MD/MBA
with Baylor College of Medicine.
The Jesse H. Jones Graduate School of Management is one of seven academic units of
Rice University. Named in honor of the late Jesse Holman Jones, a prominent Houston
business and civic leader, the school received its initial funding in 1974 through a major
gift from the Houston Endowment Inc., a philanthropic foundation established by Jones
and his wife, Mary Gibbs Jones.
PKF TEXAS PKF Texas, located in Houston’s Galleria area at 5847 San Felipe, PKF Texas is a CPA
firm that focuses on solutions for every stage of your business. With leaders who are
forward-thinking entrepreneurs and business advisors with Big 4 backgrounds, PKF
Texas provides auditing, accounting, domestic/international tax compliance and
planning, profit enhancement, litigation services, information technology and business
systems consulting to emerging and middle market companies across many industries.
PKF Texas is a member of PKF International and The Leading Edge Alliance.
THE RICE ALLIANCE The Rice Alliance supports entrepreneurs and early-stage technology ventures in
Houston and Texas through education, collaboration, and research. Since inception in
late 1999, the Rice Alliance has assisted in the launch of over 170 technology
companies that have raised more than $300 million in funding.
WOOD MACKENZIE Wood Mackenzie has been providing its unique range of consulting services and
research products to the Energy and Life Sciences industries for over 30 years. With our
foundation in quality analysis, our detailed industry understanding and our wealth of
experience, Wood Mackenzie is able to offer clients a unique skill combination that sets
us apart from other solution providers. Our market proposition is based on our ability to
provide forward-looking commercial insight that enables our clients to make better
DR. LEONHARD BIRNBAUM Dr. Leonhard Birnbaum is a Director at McKinsey & Company, Inc. and is located in the
Director at McKinsey & Company, Inc. Düsseldorf office in Germany. He is a member of the global energy and materials practice serving
clients across process industries. His main emphasis within McKinsey is on fundamental strategic
and operational transformation work. He has been serving clients extensively on CO2 topics. He
holds a master degree as well as a PhD in chemical engineering at the University of Karlsruhe.
JAMES CAMERON James Cameron is Vice Chairman of Climate Change Capital (CCC) and is responsible for strategic
Vice Chairman of Climate Change Capital and sector development, is Chairman of the Advisory Board and represents the firm at the highest
levels of business and government. James is one of the world’s pre-eminent experts in developing
market based policy responses to climate change. Prior to CCC he was Counsel to Baker &
McKenzie and was the founder and the head of their Climate Change Practice. James has spent
much of his legal career working on climate change matters, including negotiating the UNFCCC
and Kyoto Protocol as an adviser to the Alliance of Small Island States. He has held academic
positions at Cambridge, London, Bruges and Sydney and is currently affiliated with the Yale
Centre for Environmental Law and Policy. As a barrister he appeared in several of the leading cases
in environmental law. He is the Chairman of the Carbon Disclosure Project and a treasurer of
REEEP and a trustee of The Climate Group. He is a member of the board of GE Ecomagination.
TOBY CAMPBELL- COLQUHOUN Toby Campbell-Colquhoun joined Shell Trading in 2001 to help set up the Shell Global
Trader, Environmental Products, Environmental Products Trading Business (EPTB). During this time, he has advised national and
Shell Trading international institutions on emissions trading policy while helping develop commercial expertise
in the market. He now manages European Business Development for Environmental Products,
including the management of Shell compliance positions under the EU Emissions Trading Scheme,
the development and maintenance of customer relationships, and the execution of transactions on
behalf of customers.
EPTB has been a pioneer in ETS globally, executing several groundbreaking deals, including the
first trade in the EU Emissions Trading Scheme and the first trade of issued Certified Emissions
Reductions. EPTB has desks in Houston and London and has links to other Shell businesses
around the world.
IAN CARTER Ian Carter is the North America Policy Coordinator for the International Emissions Trading
North America Policy Coordinator, Association. Mr. Carter worked for ten years in the renewable energy sector as a financial officer
International Emissions for a solar technology company, targeting transfer of photovoltaic manufacturing technology.
Trading Association Mr. Carter joined IETA from Canada's Department of Foreign Affairs in late 2005.