Carbon Traders in Demand as Climate Becomes Hot Topic The Buzz


Take a deep breath. Really deep. Detect something? There's change in the air and carbon traders know all about it. Keep reading and so will you.

Carbon trading is just one slice of a big, fast-growing pie called emissions trading. And emissions trading is just one strategy to reduce the impact of global warming on this pale blue dot we call home.

What is emissions trading? In very simple terms, it's a way to get polluters to pollute less. It does this by focusing on what motivates companies: money, money, money. If they pollute less, they save money. If they want to pollute more, they have to buy credits from other companies who don't need all of their credits.

What Carbon Traders Do

The role of carbon traders (also known as carbon brokers) is to bring together buyers and sellers of emissions credits. Carbon trading is just one of many careers being generated over concern about global warming.

"There will be lots of career opportunities, but they will be broadly spread in the carbon/biofuels area," says Jonathan Rubin. He's an economics professor at the University of Maine, specializing in environmental regulation, alternative fuels and the economics of greenhouse gas reductions.

"You could be a carbon broker, which is like selling any commodity," Rubin says. "In a pure financial sense, selling a carbon credit is no different than selling gold futures. So in some senses this is exactly like any other commodity that's sold on a stock exchange."

What's Behind the Demand?

The rapid growth in emissions trading is driven by the belief that human activities are contributing to global warming. There's increasing agreement worldwide that action has to be taken.

"There's widespread scientific consensus," says Rubin. "Virtually every nation's academy of sciences, from the United States on through to China, has said that we need very significant reductions in carbon."

Emissions trading is also called "cap and trade" because emissions are capped (or limited) by an authority. The authority is typically a regional or national government, or an agency that has been given regulatory powers.

After the cap has been set, companies within each industry are given a certain number of credits. Figuring out how many credits to give each company is complicated. Companies can only emit as much pollution as their permit allows. To go above this limit, they have to purchase credits from other companies. If they don't need all of their credits, they can sell them to other companies. This is the "trade" part of "cap and trade."

According to the International Institute for Sustainable Development (IISD), the world is expected to need 50 per cent more energy by 2030. But to prevent serious changes in the planet's climate, scientists say greenhouse gas emissions should be reduced 25 percent by 2050.

"Reconciling these demands while simultaneously adapting to the impacts of climate change is one of the fundamental challenges of the 21st century," states the IISD on its website.

Various trading markets are designed to control different pollutants. Carbon dioxide is a pollutant that falls into the category of greenhouse gases. Europe leads the way in regulating greenhouse gases with the European Union Emission Trading System. Similar systems for capping and trading emissions are being developed in North America.

The Science Behind the Headlines

Even if you don't follow the news closely, you've probably noticed that climate change and the impact of greenhouse gases has been getting a lot of press recently. But lots of publicity doesn't necessarily mean that there's a good understanding of the science behind climate change.

"I still think there's a long way to go in educating the general public on the whole issue," says Bob Talbot. He's the director of the Climate Change Research Center at the University of New Hampshire.

"They know there are issues, but I think if you interviewed a bunch of people and asked them what the real issue is behind the climate, they couldn't give you a real answer."

Part of the problem, says Talbot, is that the science of climate change is extremely complicated. Also, science education in schools isn't as good as it could be, he says.

It would also help, says Talbot, if there was more funding for climate change research, but funding from the federal government in recent years hasn't been good.

"The science funding has been way down and we're really struggling to get money to do what we do," says Talbot.

Education

Carbon brokers need a general understanding of the science behind emissions and climate change.

"The education [required] really depends on where they want to join in this market," says Rubin. "If you just want to join at just the broker level, then all you need is a typical education to buy and sell any commodity -- the typical education of a stock broker --[which is] economics or business."

Carolee Buckler, a project manager with the IISD, agrees. "They would probably have an MBA or economics or finance background," she says.

"I think a lot of [employers] are looking for experience in markets in general, and in particular the carbon markets. They're looking for very multidisciplinary people who have an understanding of environmental and sustainable development issues -- specifically, anything around climate change."

Buckler says carbon brokers need problem-solving and analytical skills, as well as the ability to see the bigger picture.

Most brokers work for emissions trading firms. They might also work for a private company within a regulated industry that's involved in buying and selling emission credits. Government and nonprofit associations are also potential employers of carbon brokers.

Other Career Options

However, according to Rubin, the really exciting jobs aren't in the buying and selling of emissions credits at all. Instead, they're on the science side.

"If you want to get involved in other ways, such as the science piece of it, understanding what is a legitimate carbon credit and how you account for the lifecycle use of fuels and other processes that generate certain amounts of carbon, then that [requires] the more 'sciencey' background," says Rubin. By "sciencey" he means interdisciplinary studies in the sciences (such as ecology) as well as economics.

But what exactly is this "lifecycle use of fuels?"

"Lifecycle assessment is a cradle-to-grave accounting of the energy and greenhouse gas impacts of various fuel and vehicle systems," says Rubin. "Carbon trading has gotten the headlines, but I think the broader issue is lifecycle ecological impacts from all sorts of activities."

Examples of activities that have an ecological impact include how people care for their lawns and the types of vehicles they use, Rubin says. In looking at lifecycle energy use, researchers figure out how much energy and emissions are involved in getting fuel from the ground, transporting it and burning it in cars or airplanes.

"Different fuels, such as gasoline, diesel, ethanol and other biofuels, all have different lifecycle greenhouse gas emissions," says Rubin. "And one of the interesting things to look at is which fuel-vehicle system has the least full-cycle impact."

Conclusion

Whether your interest is on the economic side or the science side, you can find yourself a career connected to climate change and emissions reductions.

"It's a growing field and demand will only increase as a number of regulatory regimes come into being," says Jo-Ellen Parry. She's a program manager with the IISD.

"For example, the Canadian system is currently in development and the U.S. will probably have a cap and trade system in five or 10 years based on legislation that's being developed.

"Once those actually come into law and companies have to reduce their greenhouse gas emissions, there will be demand for people who know what that means."

Links

International Emissions Trading Association
Check out worldwide info on carbon trading markets, including research papers and climate related events

International Institute for Sustainable Development
Learn what's new in climate change and energy

Climate Institute
Find a good description of the science behind climate change