Green turns to gold in global warming battle

LONDON, Nov 18: A green goldrush is under way in the hunt for low carbon technologies to beat global warming.

Billions of dollars are involved, from trading in rights to emit greenhouse gases to funds supporting green technologies and backers of big projects like wind and solar farms. The stakes are high -- the planet's climate.

Barely a year ago it was mainly specialist carbon funds and hedge funds, some of which take on high risks in hope of big returns, that were prepared to bet on technologies to cut emissions of greenhouse gases.

Now the big money players are muscling in.

''This year the blue chip investors are moving in -- the big banks and the pension funds with a lot of money,'' Anthony Hobley of green investment fund Climate Change Capital told Reuters.

Climate Change Capital has nearly 1 billion dollars under management, tycoon Richard Branson has pledged 3 billion dollars for biodiesel research and blue riband investment bank Morgan Stanley has announced 3 billion dollars for carbon-related activities.

Pedro Moura Costa, founder of EcoSecurities carbon credit trading company, said there were now some six listed carbon trading funds, with market capitalisation of over 1 billion pounds whereas two years ago none were listed.

''If you pick a winner in the right technology in the search for a low carbon economy you are talking about potentially billions. It is really the holy grail,'' he told Reuters.

This week environment ministers from more than 70 countries debated in Nairobi how to extend the Kyoto Protocol on global warming beyond 2012.

Kyoto sets emissions cuts targets for 35 countries, and a deal, expected in 2009 or 2010, would further boost demand for renewable energy and rights to emit greenhouse gases, called carbon credits.

Funds which set up in 1997, as Kyoto was being negotiated, got a shot in the arm in 2002 when Britain set up its own carbon trading scheme. They received a major boost in early 2005 when Kyoto came into force and the European Union's Emissions Trading Scheme launched.

Scientists say global temperatures could rise by between two and six degrees Celsius by the end of the century due to burning fossil fuels for power and transport, causing floods, famines and violent storms and risking millions of lives.

ECO-CAPITALISTS

The warnings have pushed the climate crisis high up the political agenda worldwide and brought into being a new breed of environmentally-conscious investor.

''It is increasingly a capitalist arena. The eco-warriors are being replaced by the eco-capitalists,'' Henrik Hasselknippe, manager at the Point Carbon information and carbon analyst group headquartered in Oslo said.

Nowhere was it more obvious than at a reception in London for financiers this week, flowing with pink champagne and fine foods, to launch the 250 million dollars Masdar Clean Tech Fund.

''In 2012 the carbon market will be worth 40 billion dollars,'' said Sultan Ahmed Al Jaber, chief executive officer of Masdar, oil-rich Abu Dhabi's Future Energy Company, which established the fund with Credit Suisse and the Consensus Business Group.

Trading in carbon credits is expected to be worth 20 billion euros (25.62 billion dollars) this year, double the level in 2005 when Kyoto came into force and the EU's trading scheme started.

One possible problem looms -- while a deal to extend Kyoto beyond 2012 is expected, investors are worried about a possible gap before the new regime starts, if talks go to the wire.

''The big risk is you will not get post 2012 certainty early enough. All those big investments could shudder to a halt,'' Climate Change Capital's Hobley said.

REUTERS