Buying and selling a sustainable future

A career in emissions trading offers a curious blend of science and finance, writes Ian Mundell.

Carbon trading is one of the clearest cases of an EU policy directly creating jobs. The profession may not be large, but without the EU’s Emissions Trading Scheme there would be little reason at present for companies to bother about buying and selling carbon.

The scheme, which began in 2005, covers around 11,500 energy-intensive installations across Europe. The companies operating them are given a greenhouse gas allocation each year, expressed in terms of the most common greenhouse gas, carbon dioxide (CO2). If they produce more than their allocation they must make up the difference by buying carbon credits, either from European companies which have undercut their allocation or certified clean energy schemes outside the EU.

"Emissions have become a liability and abatement has become an asset," explains Seb Walhain, director of environmental markets with the Dutch-Belgian bank Fortis. "What we try to do is find where we can make investments to most efficiently and effectively abate. We do that with our clients in China, India and Brazil. At the same time we go to our clients in Europe, and they can be anything from steel companies and energy companies down to hospitals and universities, and ask them how much it costs them to save CO2."

The answer can go either way. "If it is above market price we tell them not to bother, we will sell it to you at the market price, you’ll be better off. And if companies say they can save CO2 below the market price, we say that we would like to buy that from them or help them finance it."

Fortis describes this part of its business as ‘carbon banking’ and it offers a broad range of services to help clients deal with the implications of the EU scheme. "We don’t look at it as a little carbon market, but what value in carbon means for the banking business," Walhain says. "What does it mean if we give loans? Should we look at it in mergers and acquisitions? What does it mean for other commodity prices?"

As in any other financial market, Walhain’s working day is built around trading. The market opens at 8am and closes at 4.45pm, and between the busiest trading times he looks for new clients, liaises with projects generating carbon credits overseas and talks to colleagues about the state of the market. Then there are administrative tasks necessary to secure carbon credits and book the deals. The working day usually ends at 7pm.

"It’s a much more immature and volatile market than most others," Walhain says. "It can be boring at times, but mostly it’s a lot more exciting. We definitely have to work longer hours and to put in more effort to keep up."

At the moment all eyes are fixed on January 2008, when the next phase of the EU’s Emissions Trading Scheme will bring in stricter emission limits. Fortis has been building up its carbon banking team anticipating higher demand for its services.

Walhain’s background is in the environment, first as an academic, then as a consultant and developer of carbon-reduction projects. But other skills are also needed. "I have a nice mixed team, with a lot of environmental scientists who understand the science of climate change," he says. "But what we see recently is that people with a lot of financial savvy but no understanding of the science are coming in and it works both ways."

Anyone hoping to go into carbon banking will need to be committed. "It’s not a job, it’s a mission," Walhain jokes. "It won’t end for a long time, which is why I need a lot of good people who can take over when I retire."

• Where to start:

The International Emissions Trading Association currently has 166 members worldwide, listed on http://www.ieta.org. But carbon trading jobs are cropping up everywhere, from financial institutions to small specialist companies. For vacancies with Fortis see http://www.fortis.com/

• Ian Mundell is a freelance journalist based in Brussels.

A career in emissions trading offers a curious blend of science and finance, writes Ian Mundell.