Several New York institutions made bids to RGGI to run the auctioning of emission allowances to Northeastern energy producers, but the contract went to World Energy Solutions of Worcester, Mass. Landing the RGGI contract has been a boon to the previously unknown energy trading house – last year, World Energy's revenues increased 35 percent over 2007 levels, even as the global economy nose-dived and energy prices plummeted.
A federal carbon market would dwarf RGGI and all other emissions trading initiatives, including the European Union's massive program, and there is growing competition among commodity exchanges to become the center of that trading activity.
World Energy is expanding beyond its traditional auction model into exchange clearing. And Europe's BlueNext exchange, the largest platform for trading in E.U. allowances, is setting up shop in New York in anticipation of a federal cap-and-trade plan.
Though much of the trading volume can be found at the Chicago Climate Exchange and Chicago Climate Futures Exchange, activity is growing at the Green Exchange, an initiative launched by the New York Mercantile Exchange.
NYMEX's Green Exchange is already a popular platform for trading in sulfur dioxide and nitrogen oxide pollution permits, but the carbon markets should become the center of activity there. Officials say they hope the Green Exchange wins the blessing of the Commodity Futures Trading Commission to run independent of the NYMEX platform by this fall.
"A lot of trading is going to reside here in New York," said Peter Fusaro, chairman of Global Change Associates and organizer of the Green Trading Summit. "I can see nirvana coming."
The private sector is actively helping to propel the New York City Economic Development Corp.'s efforts.
Global Change Associates, NYMEX, PricewaterhouseCoopers and others host "introduction to carbon markets" courses every month for money managers and investors that are designed to teach New York's financial experts, including many recently laid off, the ins and outs of greenhouse gas emissions trading.
But the momentum building almost guarantees fresh excesses and abuses of the kind that came with previous Wall Street booms.
Andy Ertel of Evolution Markets urged his colleagues here to do all they could to discourage and distance themselves from the "Brooklyn Bridge salesman" who will inevitably come. He joked that he had already seen a Nigerian carbon market e-mail scam come across his desk.
"We're here about the environment first and making money second," Ertel said. "We have to be self-policing."
Reprinted from Greenwire with permission from Environment & Energy Publishing, LLC. www.eenews.net, 202-628-6500