Opportunity through Earned Carbon Credits

The United States has not signed the Kyoto Protocol, but awareness of the greenhouse gas challenge has grown among American consumers, scientists and regulators. As a result, carbon emissions and offsetting carbon credits represent a growth market. The Obama Administration has pledged to sign some form of commitment to reduce greenhouse gas emissions. This will allow US firms to trade earned credits on the much broader and lucrative European Carbon Exchange markets and simultaneously raise prices on the Chicago Climate Exchange. Carbon reduction certificates earned by US firms will be more valuable. Coincidentally, signing international agreements will force US industries to offset carbon emissions with carbon credits, increasing demand and raising prices of US Carbon Credits. While this could lower European Carbon Credit prices, the increased demand caused by US entry should negate the effect. Bottom line, Carbon Credits should enjoy a long term market, and should escalate in price.

Currently, Kyoto signors enjoy trading prices for carbon offset credits at 5 to 7 times that paid for US source credits. As an example, the CCX credits were at $5.88 per metric ton when European Carbon Credits traded at $37.39. Though not specifically planning on this price increase, when it occurs, IOE will be in a position to further augment income by this means.