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Morgan Stanley makes $3B carbon trading bet
October 26, 2006 - by Dana Childs, Cleantech Group
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Morgan Stanley (NYSE: MS) announced today that it plans to invest in approximately $3 billion of carbon/emissions credits, projects and other initiatives related to greenhouse gas (GHG) emissions reduction over the next five years.
The majority of this investment will represent increased commitments to purchase carbon credits and expand its existing carbon credit trading practice. The remainder will go towards direct investments in projects and initiatives related to emissions reduction as called for in the Kyoto Protocol.
Morgan Stanley's plan to invest in carbon credits and energy projects to reduce greenhouse gas emissions is the largest commitment so far by a financial intermediary to the carbon emissions market that sprang from the Kyoto Protocol, and contrasts with the position of the US Government, which pulled out of Kyoto in 2001.
The global carbon market, which facilitates carbon emissions trading, allows polluters to pay others to cut greenhouse gas emission on their behalf to meet targets put forth under the Kyoto Protocol. The protocol sets greenhouse gas emissions limits on 35 industrialized countries - which they must meet by 2012 - but allows countries exceeding these to fund cuts elsewhere and count them as their own.
Carbon trading was a $21.5 billion market in the first nine months of 2006 according to the World Bank. That's already up from about $11 billion for all of 2005. Some experts think carbon trading could be worth many times that within the next few years, and think it may peak in 2007 and 2008.
Specialist investors like Morgan Stanley are lapping up emissions-permitting carbon credits and preparing to offer them to countries chasing targets as the 2012 date nears. Banks hope to serve as intermediaries - buying credits from emissions-cutting projects now and selling on to national governments and industry later - at a profit, of course.
One estimate suggests carbon trading could be worth $1,000bn as the 2012 Kyoto deadline nears.
Morgan Stanley declined to be interviewed for this story.
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Comments
$1,000bn is HOW much?
Submitted on October 27th, 2006 by Dallas KachanWe were going to write "one billion" above instead of $1,000bn, until we remembered that a billion means different things different places.
In the U.S., one billion is 1,000,000,000, and a trillion is 1,000,000,000,000. So one trillion is one thousand times one billion. In the British system, one billion is 1,000,000,000,000 and one trillion is 1,000,000,000,000,000,000, so one trillion is one million times one billion.
Either way, that's a lotta Halloween candy.
U.S. can't afford to participate in Kyoto
Submitted on October 29th, 2006 by InterestedReaderThe media loves to point out that the U.S. isn't a part of Kyoto and imply we're bad global citizens. But as the biggest economic engine in the world, we've got the most to lose economically.
President Bush says the treaty requirements would hurt the U.S. economy to the tune of $400 billion and cost 4.9 million U.S. jobs. Who wants to lose 5 million jobs?!
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