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Government Moves to Drive Carbon Emissions Market

|Includes:iPath Global Carbon ETN (GRN)

 We are strong believers that further climate change legislation (which will undoubtedly be very complex) is on its way, and probably has more chance of making it through the U.S. political system than President's Obama's healthcare proposals.  This will receive strong support from the guilt-ridden Baby Boomers and the environmentally aware Generation Y.

On the world stage, the Kyoto Protocol is scheduled for expiration in 2012, with talks for a new framework for climate change measures kicking off in December at a U.N. conference in Copenhagen.

President Obama's support in Copenhagen is very important in driving the Carbon Emissions Market forward and we believe this market will provide the next stage of growth in the secular "Clean Energy Bubble" (it will likely surpass the present China madness).  It also may come to dominate the other forms of clean energy.

The Waxman-Markey, or American Clean Energy and Security Act, passed by the U.S. House of Representatives in June, will allow the U.S. government to certify 4.6 billion carbon allowances in 2012 at an inflation-adjusted price of $17.46 a ton, placing the value of the U.S. carbon market at $84 billion. It also aims to cut carbon dioxide emissions from 2005 levels by 17 percent in 2020 and 83 percent by 2050. However, expect this bill to be blocked, chopped and changed as it makes its way through the Senate this fall, as the powerful energy lobbies remind senators who's boss.

Wall Street is silently gearing up for changes with which to accommodate this new market place, and in the next five to ten years a new breed of entrepreneur will emerge to take advantage of these new challenging opportunities.

Steve Gelsi for MarketWatch explains that the U.S. Executive may have to react quickly over the next 12 months with carbon cost, rules and benefits associated with their products and services, while consumers will be reminded of the carbon footprints their purchases made during production.

We strongly support a greater "Green" awareness of the planet and less pollution from cleaner power emissions to less infuriating consumer packaging (toy manufacturers please take note).  Solving the planet's pollution problems will be done through engineering solutions not mass media hype solutions. We hope the "Wise Old" media have learned from their "Year 2000 Computer Bug Hoax" that ran from 1997 to 1999. 

For those interested, more information on Carbon Emissions Market can be found on the iPath's web site, and prices can be followed through the iPath Global Carbon ETF (NYSEARCA:GRN) or the European Climate Exchange. It is also worth noting that iPath Global Carbon ETF is up over 86 percent since the March 2009 lows and the ECX EUA daily futures contract is up nearly 43 percent. On a sentiment basis we prefer this carbon space to the overly "Hot" area of emerging markets, which desperately need this market to help clean up their own "Back Yards."

Disclosure: No Positions.

Stocks: GRN