TEXANS TRAIN TO TRADE EMISSIONS

When – not if, when – Congress enacts a mandatory national greenhouse gas emissions cap-and-trade system it is expected to grow into a $600 billion to $1 trillion per year market by 2020.

Cap-and-trade legislation has already been passed through Senate committees and is expected to be the subject of floor debate in the spring. Insiders say it is unlikely to be passed until after the November presidential election.

Richard Sandor, CEO, Chicago Climate Exchange/professor, Kellogg School of Management- Northwestern University: "The 21st century will see yet another wealth driver by commoditization, but this time of air and water…In fact, we will witness, as it should be, those becoming the most precious commodities in the world."

Houston, home to the U.S. oil and gas industry, wants to be ready to put its expertise at energy trading to work in the new market.

The announcement of this program is another small example of how a change is most assuredly coming.

Lots of new emissions lingo to learn for Houston's old energy traders. (click to enlarge)

UH wants a focus on carbon trading; Business-law course to train for what’s expected to be a growing field
Tom Fowler, March 11, 2008 (Houston Chronicle)

WHO
C.T. Bauer College of Business Global Energy Management Institute (GEMI), University of Houston (UH) Law Center (Victor Flatt, environmental law professor; finance professors Craig Pirrong and Praveen Kumar)

Volume in emissions markets is steadily growing. (click to enlarge)

WHAT
GEMI and the UH law school will join to offer a course on emissions trading, designed to familiarize the Houston-area energy-trading community with the complexities and opportunities of the new market.

WHEN
- The new course will be taught in the upcoming spring semester.
- GEMI launched in 2002 for concentrated studies in energy-related finance and trading.
- UH’s Center for Environment, Energy and Natural Resources Law launched in October 2007.
- UH Law Center has published the Environmental & Energy Law Policy Journal twice a year since 2005.

The EU ETS has been steadier than U.S. markets lately. (click to enlarge)

WHERE
- Houston is the trading hub for the fossil fuels and electric power markets.
- The Chicago Climte Exchange (CCX) is presently the biggest U.S. emissions trading market. The NYMEX Green Exchange just opened March 17. Both trade voluntary emissions offsets.

WHY
- When a cap-and-trade system is enacted, there will be a need for attorneys and business people with knowledge of the details.
- The EU emissions market value doubled last year to $60 billion.
- Houston emissions trading offers lower business costs and a deep energy-trading talent pool but NY, D.C. and Chicago have the lawyers and banks.

Houston will also have to be familiar with the UN Clean Develop Mechanism (CDM). (click to enlarge)

QUOTES
- Victor Flatt, environmental law professor, UH: "Very few colleges or law schools have looked at CO2 trading, and those that have focus just on the European Union system…We will look at the EU and the systems being developed in California, but also look at the moving target of U.S. legislation toward a federal CO2 market."
- Flatt: "Other schools that have looked at emissions markets have focused on having practitioners from the industry come in and speak, and we'll do that, too…But we don't think anyone has put the academic resources behind it that we have."