Thursday, 1 September 2016
Last updated 4 hours ago
Apr 3 2008 | 3:02am ET
Peter Fusaro, co-founder of the Energy Hedge Fund Center, kicked off the Wall Street Green Trading Summit yesterday in New York City with one message for attendees: Carbon is the new gold.
According to Fusaro, the U.S. is entering a “carbon-constrained world” faster than anyone realizes, and the country will have to reduce its six-billion-ton carbon footprint “through innovation and markets.”
“With today’s oil price of over $100 per barrel, coal at $75 per [ton] and natural gas at $10 [per MMBtu], many businesses are incentivized to do the right thing and start implementing today’s technology,” said Fusaro, adding that Fortune 1000 companies are beginning to take measures to reduce their carbon footprints.
Fusaro, who has been a long-time proponent of carbon trading as the missing link in cleantech investing, said that price discovery for carbon is inevitable and companies and alternative investment managers will be jumping on the green band wagon once it becomes available.
“Public companies are going to be green and IPOs are going to change in their valuation models, he said. “I’m hearing about CDOs for carbon and looking at new structures for project finance, venture capital, private equity and hedge funds,” he said.
Specifically, Fusaro foresees a blurring of the lines between green venture capital firms and hedge funds, whereby the former use long-term lockups, perhaps six to 10 years, and trade various revenue streams, while hedge funds, which traditionally have been arbitrageurs in the space, develop carbon strategies with one-year lockups.
But while there’s a lot of interest in the green sector, there’s still a dearth of knowledge and intellectual capital, according to Fusaro.
Still, recent developments such as NYMEX Holding’s announcement that Goldman Sachs has agreed to participate in building the Green Exchange—which will offer a range of environmental futures, options and swap contracts—has Fusaro seeing a bright green future.