Turning trees' carbon into silver

Large utilities are often buyers, looking to snap up carbon credits in anticipation of cap-and-trade legislation's passage and a rise in the cost of credits, said Sean Carney, Finite Carbon's vice president of carbon finance.

Hedge funds and multinational firms also view carbon credits as promising investments, he said.

What's missing is a national market that would put a price on carbon. The American Clean Energy and Security Act, which the U.S. House passed in June and is awaiting Senate action, would do that.

Currently, prices on voluntary-compliance markets such as the national Climate Action Reserve and regional markets such as the Regional Greenhouse Gas Initiative vary widely, from 40 cents per ton of carbon offsets to nearly $6.50 per ton.

"While the presence of a mandatory national market would create the greatest opportunity for Finite Carbon, the company's success is not dependent on it," Nissenbaum said.

Worth noting, he said, is that the interests of Finite Carbon and its clients are aligned. Rather than charge a fee, the company gets a percentage of the forest-carbon offsets after a project is registered and approved. The cut is based on such things as the number of acres and their location, the carbon stocks, and the type and number of landowners.

"Not only do we have a vested interest in the success of the project, our compensation comes from monetization at the end," Nissenbaum said.

In the environmental community, meaningful payoff is reducing global warming. At PennEnvironment, Willcox's reaction to credits granted in any cap-and-trade system is decidedly mixed.

"How do you ensure that the forest-carbon industry doesn't become another Wall Street, whereby forest owners are getting credit for pollution reductions not actually achieved, due to loopholes in the system?" he asked.

Carney, a former broker at CantorCO2e, an emissions-brokerage subsidiary of Cantor Fitzgerald L.P., insisted Finite Carbon's motives are as much about protecting the environment as they are about making money.

"We're here to do well, by doing good," he said.

A Primer on Cap-and-Trade

"Cap-and-trade" is another name for emissions trading - a method of controlling greenhouse gases by creating a market for permits to pollute.

The government sets

a hard limit - the cap - on emissions and grants allowances to regulated emitters of gases such

as carbon dioxide. Industries that need more allowances trade for them from companies that have an excess.

Under legislation passed by the U.S. House and awaiting action in the Senate, the cap would gradually be reduced to achieve a 3 percent reduction of 2005 emissions levels by 2012 and an 83 percent reduction by 2050.

- Andrew Maykuth

Contact staff writer Diane Mastrull at 215-854-2466 or dmastrull@phillynews.com.