A decade ago environmental attorney Marco Monroy approached food giant Nestle with a novel proposal. If the company converted boilers at its ice cream factory in Chile from coal to natural gas, it could cut emissions of carbon dioxide by up to 50 percent.
It wasn't an easy sell.
The conversion would cost $100,000, and on top of that natural gas was more expensive. But Monroy had a surprising pitch. He explained that the reduced carbon emissions could be sold on the world market and were worth $50,000 a year.
The concept, known as carbon trading, was still new, and it took a while for Nestle to agree.
"At first people didn't believe what I was saying, said Monroy, 40. "It took a lot of persuasion."
Nestle eventually took his advice, selling the carbon "credits" to a Japanese utility that was looking to offset its emissions to meet low carbon regulations.
The Nestle deal became one of the very first projects in an emerging market for the trading of greenhouse gas emissions, which scientists say cause global warming. Monroy has since completed hundreds more carbon-reduction projects around the world, turning his small Miami startup company, MGM International, into a global leader.
A lot has changed since the early days. "Most people now understand that we need an international system to deal with global warming," Monroy said.
That system, known as cap and trade, is suddenly on everyone's lips from Tallahassee to Washington, where last week a version of a cap-and-trade bill passed the House energy committee. The legislation would have major implications for industry, especially power companies that are the largest emitters of greenhouse gases such as carbon dioxide.
"It's a huge new frontier we are on the verge of," said Susan Glickman, a prominent St. Petersburg environmental activist. "Companies are coming to the fundamental realization that the way we have been operating is a thing of the past."
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A cap-and-trade system attempts to reduce greenhouse gases, such as carbon dioxide, methane and nitrous oxide, by imposing a limit on permitted emissions.
A timetable requires emissions to be reduced gradually to a level scientists believe is safe for the health of the planet. In order to meet the timetable, companies can either invest in new low-carbon technology or purchase credits from companies that have reduced their emissions.
"The system uses the fundamentals of international trade," said Monroy, who was born in Colombia. "In carbon trading, too, it is sometimes cheaper to import from another country than do it domestically."
The carbon market is already worth about $30 billion a year globally, and Monroy forecasts that could rise to $200 billion by 2012, though the current global financial crisis is slowing growth.
The U.S. market alone is estimated to be about 6 billion tons of greenhouse gases, representing potentially $120 billion annually. Interest on Wall Street has gathered pace. Financial giant Morgan Stanley purchased a 38 percent stake in MGM in 2007.
MGM has expanded to 110 staffers in 12 offices worldwide, currently managing 184 projects with an estimated carbon reduction of 100 million tons.
At MGM's bayfront headquarters near downtown Miami, a dozen staffers manage projects around the globe.
Jose Baron and Jorge Ramirez, both from Colombia, manage the company's forestry conservation and tree planting projects, a key means of earning carbon credits due to the ability of plants to absorb carbon dioxide through photosynthesis. Others help identify projects in emerging markets, closely monitoring legislative developments.
"We explain to companies the financial liability they might have in the future and the benefits they could earn from taking early action," said Daniel Smyth, head of finance and business development.
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In 2007, Gov. Charlie Crist set a goal of reducing emissions to 2000 levels by 2017, and dropping to 80 percent below 1990 levels by 2050. A major part of the goal was a cap-and-trade plan, which is due in November.
Florida's cap-and-trade proposal would cover only power utilities, which account for about 40 percent of greenhouse gas emissions. The federal scheme would also include transportation, which accounts for another 36 percent of emissions, as well as industries such as phosphate mining, cement, refineries, agriculture and chemicals.
"Hopefully it has targets that are achievable and affordable for our customers, because ultimately they are the ones who are going to have to pay for this environmental policy," said Vincent Dolan, vice president of external relations for Progress Energy, referring to proposed federal legislation. Like most utilities, his company supports the idea of cap and trade with reservations.
Many environmentalists argue that better energy efficiency in existing production is the cheapest and least painful way to control emissions, at least in the short term. Until now utilities never saw much benefit in improved efficiency, due to a rate structure that paid them to produce more electricity.
"Once you put a price on carbon you shift the whole dynamic to where there is more value placed on being more efficient," Glickman said.
Utilities say much depends on the details of the trading system. Companies dependent on coal-fired power plants favor a lengthy transition to give them time to implement cleaner technology such as "clean coal," wind, solar and nuclear.
Tampa Electric officials say the company invested $1.2 billion in emissions reduction, largely by switching one plant from coal to natural gas. "We want to make sure that is taken into account," said Byron Burrows, the company's manager of air programs.
About 50 percent of the company's energy comes from coal. Under the cap-and-trade system, owners of coal-fired plants would have to purchase credits on the carbon market to offset their emissions.
Progress Energy has four coal-fired plants in Crystal River. To meet Crist's target, the company says it would likely have to rely on nuclear power, which has zero emissions but is hotly debated due to radioactive waste.
Monroy predicts it may be a while before Congress agrees on a final scheme, but it's only a matter of time. "I think there is a common understanding that we have to move to a low carbon economy," he said. "There's no way back internationally or domestically."
David Adams can be reached at firstname.lastname@example.org.