THE CARBON EXPO, an annual jamboree for emissions traders which your correspondent visited last week, says a lot about the peculiar state of the business of fighting global warming. Like any trade fair, it abounded in stalls with eager salespeople peddling their wares: projects that would reduce greenhouse-gas emissions, financing for and auditing of such projects, and advice about how this whole burgeoning new business works.

And work it does. In 2007, emissions trading grew into a $60 billion business. Much of that came from within the European Union, which has capped the emissions of big factories and power plants, but allows firms that exceed their allocation to buy unused pollution rights from those that have some to spare.

Carbon ExpoUnclear and future danger

Another good chunk of the $60 billion came from the “Clean Development Mechanism” (CDM), whereby rich countries that have pledged to reduce their emissions under the Kyoto protocol can pay for cuts in the developing world instead. Poor countries eager to secure a slice of this booming business sent delegations to the Expo to drum up investments. India touted opportunities in energy efficiency; a Yemeni brochure advocated reducing emissions by ending natural-gas flares at oil wells; and Burkina Faso advertised the potential of its forestry sector.

As those examples suggest, the crowd was resolutely international. One panel featured a Gambian woman quizzing a Costa Rican on how best to distribute energy-saving light bulbs. Europeans predominated (the event took place in Cologne), but there were plenty of Asians, Africans and Latin Americans—and a good number of North Americans too.

On the whole, they were bankers rather than development types. There were no sandals or ethnic garb, and only a few beards. Almost everyone wore well-pressed grey suits, although a few of the more daring dispensed with ties.

Nearly every stall offered free gifts of some sort—testifying perhaps better than anything else that business was indeed booming. Alongside the usual pens, notepads and golf tees emblazoned with corporate logos were more elaborate items: tiny torches for keychains, boxes of coloured pencils, even yo-yos.

One bank handed out universal adapter plugs, a gift that hinted at the sort of jet-setting life-style that might make more squeamish environmentalists blanch. Hunton and Williams, a law firm, was distributing enviro-chic burlap bags with the slogan “Climate—It’s our bag”.

The global food crisis did not seem to have harmed carbon purveyors. Expensive chocolates—including Mozart Balls, a fancy Austrian brand; and Green & Black's, an organic British variety—were everywhere. The tables at the stand of Germany’s Deutsche Bank groaned under the weight of smoked-salmon canapés. Standard Bank of South Africa laid on treats from home including biltong, a kind of beef jerky, and something called “Cape brandy tart”.

Even more extravagant was the booze: wine, beer and champagne flowed freely. But Evolution Markets, a brokerage firm, stole the show with its “Latin Lounge”, where thirsty econauts queued for free caipirinhas and mojitos next to sign that read “Viva el Kyoto”.

And then there were the gimmicks: one firm laid on battery-powered rickshaws that ferried visitors to and fro. The batteries, the rickshaw-wallahs volunteered, were recharged using solar panels.

An outfit called EnviroMarket collected business cards for a draw, the prize being enough carbon offsets to salve the consciences of “your whole team”. Embarrassingly enough, both KPMG, an accounting firm, and First Climate, a carbon broker, had laid on table football sets. As one Expo veteran noted, “It all seems a little frothy.”

espite all the glitz, however, the future of the industry looks parlous. The World Bank warned that the coming years look leaner. There are already enough projects underway to provide all the offsets needed by the rich countries under the Kyoto treaty, which expires in 2012. The market for voluntary offsets, although growing fast, remains small.

And although America seems more inclined to accept emissions caps these days, it will take a long time to legally mandate them. Besides, there is no guarantee that the world will agree on a replacement to Kyoto, or that a new deal will preserve the CDM. No wonder there was a giddy, fin-de-siècle atmosphere among the stalls at the Expo. Carbon trading has either a very rosy future, or none at all.  Source

Average user rating