As the market for emissions reduction credits for greenhouse gases has grown, more and more US banks and investment firms have created new programs to get into what is called the "carbon market", since the major greenhouse gas is carbon dioxide. Just recently, Morgan Stanley has announced its plans to invest some $3 billion in the carbon market and other clean energy markets. With the growing international market for carbon credits and with the advent of the Kyoto Protocal and the European Union Emissions Tradting Scheme (ETS), investors, brokers, and traders have found a huge market for these credits and significant opportunities in the projects that generate the credits--such as wind energy, biofuels, landfill-gas-to-energy, and energy efficiency. Many of these projects are in developing countries where the Kyoto Protocol allows the development of projects that cut green house gases and the generation of emission reducton credits that can be sold to EU companies that require the credits to offset their carbon emissions.
With the mandatory carbon reductions having passed in California and several northeastern states, and the multiple bills being filed in Congress, real greenhouse gas reductions appear more likely to be imposed not only in some of the states, but at the federal level. If the United States does impose a natioanl carbon cap-and-trade program, the international market is likely to become worth tens of billions of dollars. It is not surprising then that the Morgan Stanleys and Goldman Sachs of the world along with international banks are positioning themselves to be major players in these markets.
