Bankers go Green for Profits at Asia Emissions Fair
Date: 31-Oct-06
Country: CHINA
Author: Emma Graham-Harrison
"Where's the money?" one trader barked at a nervous-looking Chinese consultant.
"I need to see the money in this deal," he added, with a ruthless eye for profit that few would associate with trying to save the world.
But the brokers, bankers, consultants and lawyers who flocked to the Chinese capital for the first Carbon Expo Asia were all looking for deals that could help ward off climate change.
With delegates more interested in assets than activism, and not a Greenpeace T-shirt or pair of leather-free sandals in sight, the conference is typical of a new type of green event.
And it delights the pioneering economists who were laughed at when they first suggested using markets to try to rein in growing emissions of carbon dioxide and other greenhouse gases.
"Everybody in this market for more than five years took a lot of risks, because it could all have collapsed, and they did it because they felt they had to do something about global warming," said Robert Dornau of verification firm SGS, which checks that programmes to tackle emissions are not cutting corners.
"But now it's moved from a political issue to a market issue. If you talk to someone from a hedge fund they are here to make money only, which is good, because you need that."
The market was fostered by the Kyoto Protocol, which set emissions reduction targets for industrialised nations and allowed them to meet part of those goals by buying pollution cuts from poorer nations.
UNCERTAIN FUTURE?
It is booming so fast -- worth over US$21 billion in the year to September compared with just US$11 billion in the whole of 2005 -- that the Expo brought together a strange mix of backgrounds and expertise as businesses rush to cash in.
Delegates from a paramilitary organisation that controls much of China's restive northwestern region rubbed shoulders with World Bank officials and members of the European Parliament.
The Asian Development Bank estimates that the Kyoto pact could channel US$6 billion to US$15 billion a year into the region -- but the trendy market was once a more challenging place.
"In 1996 or 1997 it could take a couple of years to get together the capital for one of these projects, you needed to find someone willing to back a whole vision," said Jackrit Watanatada of hedge fund RNK Capital LLC, which has environmental investments worth several hundreds of millions of dollars.
Some players worry that with the Kyoto-mandated emissions caps due to expire in 2012 and nothing yet agreed to replace them, they could see a return to those days.
But others take heart from a growing economic argument for tackling climate change sooner rather than later. A British report published on Monday warned that ignoring it could lead to economic upheaval on the scale of the 1930s Depression.
And for now the market is making almost everyone happy by persuading companies that they can make money by doing good.
"After this conference, energy efficiency in the metal industry is certainly something I would be interesting at looking at," said Tim Tu, president of United Metals Enterprise Co. Ltd.
"It had not occurred to me as a business opportunity before."