Planning ahead

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The figures for 2006 are in, right on time to confound critics, who this time last year scoffed at the idea that green credits would ever takeoff as viable in mainstream international stock markets. And they are good. In fact, the international market in carbon trading tripled last year to total over US$30bn.

With figures like these it is no wonder that governments and businesses are starting to take notice, especially as the green lobby gathers evermore momentum. Whether the debate currently raging over just how bad global warming will be and how quickly it will affect our current environment is resolved by the competing factions or not, the fact remains that all agree that change is here for good.

Currently the European Union remains the catalyst that is pushing the carbon trading market forward. The World Bank's seventh annual carbon market intelligence study showed that over US$25bn of last year's trades were effected under the EU's emissions trading scheme.

The remaining US$5bn was the result of a doubling of officially backed carbon offset investments in emission reduction schemes in developing countries. In addition to the US$30bn traded, a further US$14bn has been raised in "associated investments" on clean energy projects in developing countries.

When the report was released earlier this year Warren Evans, the Bank's Director of Environment, summed up the growing financial phenomenon rather neatly: "These numbers demonstrate that the carbon market has become a valuable catalyst for leveraging substantial financial flows for clean energy in developing countries."

This trend is being funded by companies across the spectrum; it is no longer only manufacturers and industrial companies that are involved, banks and finance houses, sensing growing opportunity, have joined the chase - earning substantial, and relatively low risk, results on invested capital.

Airlines in particular are feeling the pinch of the new waves of regulations that are funding the carbon markets, as they bear the brunt of the blame for CO2 emissions from their rising carbon footprints - both in taxation and higher fuel charges. As Paul Charles, Virgin's Corporate Communications Director illustrated at the 2007 Media & Marketing conference in Dubai, green issues are close to the top of airlines' list of priorities: "We are now going out of our way to highlight our green credentials; whether it's the fact that our planes are towed onto the runway with their engines off, or whether it's giving passengers the chance to offset their carbon footprints by contributing financially to some of our schemes."

This sentiment of prioritisation was echoed by James Hogan, Etihad's CEO: "It is something that we are all having to deal with and we are all making changes."

The topic is such a burning issue for the industry that November saw London host a conference entitled "Preparing for the implementation of the Aviation Emissions Trading Scheme" with the focal point revolving around how to offset the financial penalties. Although for now the EU legislation encompassing airlines, set to come into force early 2008, is only applicable to European providers, they will eventually be expanded to any carrier flying into the continent, possibly as early as 2012.

In preparation, many are already looking for ways to invest in extra emissions credits to cover their consumption over the cap.

This trend is being matched across industries. Every single major energy and oil company is pouring billions of dollars into researching alternative renewable energy sources such as solar and wind power.

Property developers are also taking note and many are already planning for the future by launching their own eco-initiatives - Nakheel's Jumeirah Islands are a prime example of this. Similarly, Kuwait's National Projects Holding Co is an early addition to the UAE's ‘green' market by building the country's first industrial recycling plant - one of a slew of planned projects that will reap the dividends of the renewed environmental focus.

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