Business is booming

by Julie Walsh on April 11, 2008

Richard Sandor, president of the Chicago Climate Exchange (CCX), said in an interview with E and E TV (subscription req), “I just want to see reductions.” CCX also owns 50% of the European Climate Exchange, which covers 85% of EU emissions credits.

It dawned on me after reading this paragraph from the Wall Street Journal’s “EU greenhouse-Gas Emissions Rose 1.1% Last Year” that investment banks and hedge funds actually don’t want EU companies to reduce their emissions:

"Hedge funds, investment banks and brokers trade carbon permits as they would any other commodity, like gold or oil. And while the data released Wednesday might fuel pessimistic predictions about the effectiveness of the scheme in holding back emissions, financial players were bullish about what it meant for the carbon market."

It’s in the financial interest of hedge funds and investment banks, such as Goldman Sachs, for those emissions to keep rising. The less companies reduce emissions, the more carbon credits they need to buy. The lower the emissions cap, the harder for companies to meet the cap with actual reductions and the more money these banks and funds make through companies needing to purchase carbon credits for them.

As Sandor says about the lowering EU caps, “…lower is what we want, right?”

Henry Paulson, the current US Secretary of the Treasury and former Goldman Sachs CEO, co-founded with Al Gore, Generation Investment Management. GIM now manages $5 billion in “sustainable” investments. And Goldman Sachs owns 10% of the Chicago Climate Exchange. (See blog post entitled “Maurice Strong”)

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