Image source: www.wri.org
I listened to an excellent podcast from ABC’s Background Briefing the other day. Entitled: ‘The rise of the carbon traders’, it gives an excellent overview of the current state of play in this rapidly emerging market, created to address the growing problem of global warming. The audio runs for 49 minutes, and the program also comes with a transcript. The essence of the story is that companies could find themselves financially exposed unless they start generating carbon credits (e.g. planting trees, building wind farms). As the pressure to reduce emissions becomes more intense, and as other countries join with the Europeans in introducing a carbon trading scheme, the market will vote with its feet and it is only a matter of time before a large pension fund announces that it has sold stock in a company because of the risk associated with its poor carbon performance.
The fact is that, some day soon, even the climate change recalcitrants like the US and Australia will have no choice but to regulate, and all of a sudden the atmosphere can’t be used for free any more. Some large companies are already operating in the carbon trading market without being compelled to as part of a risk management strategy. They see the writing on the wall, and they don’t want to see their share price fall as fund managers start offloading their stock. Interestingly, the state governments in Australia are not waiting for Fossil Fuel Howard to act, just as the Governator is not waiting for Dubya.