Recently, the federal government has provided incentives for individuals to go green: for example, the tax rebate for energy efficient appliances or the 30% tax credit on private home installation of solar panels. But given the  economy, there have been portions of both federal and state budgets dedicated to helping make businesses greener, too.
For example, the EPA provides rewards to small companies that provide cutting-edge R&D and runs the Energy Star for Small Businesses program, which facilitates remodeling and maximization of energy and cost savings. The federal government also provides tax deductions for energy savings by real estate developers and business owners who invest in smart energy grid equipment.
Additionally, non-profit organizations like Georgia Green Loans and the majority of state energy departments provide loans or grants to allow for the greening of local businesses. So despite some dissenting voices saying that the environment should take a back seat to the economy right now, the government is providing the means for businesses to take care of the earth and their bottom line.

On April 30th, the Intercontinental Exchange (ICE) announced via press release that “it has agreed on terms to acquire Climate Exchange plc (Climate Exchange or CLE), a leader in the development of traded emissions markets. Climate Exchange operates the European Climate Exchange (ECX), the Chicago Climate Exchange (CCX) and the Chicago Climate Futures Exchange (CCFE).”
Richard Sandor, the Chairman of CLE, said, “a combination with ICE makes strategic sense,” and the current contracts in place that allow ICE to provide electronic trading platforms to some of CLE’s markets demonstrates the opportunity for an easy business transition.  The acquisition helps to confirm that carbon – like oil, milk, or steel – is a commodity, to be traded at a universal world price determined by interactions between supply and demand. This reinforcement of the carbon market’s legitimacy also helps to increase carbon’s liquidity, or price stability despite large market transactions.

“The combination of Climate Exchange’s emissions markets and ICE’s futures and OTC energy markets is an important and logical strategic combination for our customers and shareholders, and clearly an exciting opportunity for ICE to grow and further diversify our revenues,” said ICE Chairman and CEO Jeffrey C. Sprecher. “ICE has been a partner with Climate Exchange and Dr. Sandor since 2003, and we have worked together toward the development and expansion of the emissions markets. The leadership that Climate Exchange has shown in establishing market standards in Europe, and increasingly the U.S. and Asia, has driven its success, and we see continued growth opportunities within these nascent markets globally.”

Dr. Richard Sandor was integral in the founding of Verus Carbon Neutral and will remain on our Board of Advisors. Verus looks forward to working with ICE, especially since they are headquartered in Atlanta.

Calpine is going where no power company has gone before by initiating the first power plant that will be more efficient than proposed GHG emission reduction criteria at both the federal level and at those of California cap-and-trade regulations set to go active Jan 1, 2012. Construction is set to begin next year on the 600-megawatt natural gas-fired plant. The Russell City Energy Center, spanning 15-acres, will reside just east of the San Francisco Bay.

With the EPA moving toward GHG regulation from large emitters under the Clean Air Act, and cap-and-trade on the horizon, Calpine is taking the lead by developing in a direction makes them both more ecologically as well as economically sustainable. Calpine is already one of the worlds largest geothermal producers, and by advancing gas-fired power generation that produces GHG emissions at less than 50% that of coal-fired power plants, they are poised to be the company that helps California achieve it’s energy needs for the future and leads the way for power providers nationally.

The Russell City plant will handle base load power demand, but Calpine is promoting use that is supplementary to other cleaner and more renewable technologies as they evolve and roll out. Pacific Gas and Electric Company, the purchaser of the electricity, will have the option of balancing and dispatching from all energy sources and using the gas-fired plant when solar and wind cannot meet demand or are unavailable.  Sierra Club chief climate counsel David Bookbinder said “Calpine is leading the way and showing how it’s possible to generate all the electricity that America needs with half the greenhouse gases.” Linda Adams, secretary of the California EPA commended, “We applaud the BAAQMD and Calpine for going beyond existing federal law and being the first in the nation to require an enforceable greenhouse gas limit.”

Despite the turbulent energy environment, it is not surprising that Calpine is being discussed as a top stock pick.

In 2004, Peter Cartwright, founder and CEO of Calpine, earned recognition as a Business Leader of the Year by Scientific American. They noted the companies outstanding environmental record, dramatically lower emissions relative to the rest of the industry, and a stated commitment to cut those emissions even further for all future developments. The company was also recognized for their use of combined-cycle technology that captures energy that is wasted in the single cycle systems that currently predominate.

Then in 2005, they became the first independent power producer to achieve the distinction of Climate Action Leader and voluntarily disclose GHG emission information to the public. In the press release, Neal Pospisil, Calpine’s vice president of safety, health and environment stated: “Being at the forefront of environmental accountability is a priority for Calpine and taking inventory of our carbon emissions profile is one of the first steps in finding new ways to manage our carbon dioxide emissions…Having a third party certifying that inventory further ensures that Calpine’s reporting meets objective, uniform standards.”

Calpines steady efforts and climb to leadership shows that it really pays off to find out where you are and take a good look around so that you can move confidently to where you want to go.

“We’re glad the SEC is stepping up to the plate to protect investors.”

- Ann Stausboll, CEO, California Public Employees Retirement System

On Wednesday The Securities and Exchange Commission said for the first time that companies should inform investors of any risks to its business from climate change. For years, big investors like CalPERS have been asking the SEC to issue guidance telling companies to disclose risks to their financial results posed by climate change. It was a pretty reasonable request, given that cap and trade laws, international restrictions and severe weather could pose a significant business risks for certain companies.

Take Exxon. If the cost of using fossil fuels goes up, their customers become incentivized to use far less of it. This could have a ramification for their business. Similarly, an big increase in storm activity in the North Sea could significantly impact the natural gas production of offshore rigs. Perhaps the company may want to incorporate such things into their long-term strategy. Their investors, understandably, might want KNOW that the company has considered these possibilities and taken the proper steps to mitigate the risks and capitalize on the opportunities. Fiduciary responsibility, anyone?

While some companies have been forthcoming with this kind of information, most have not confronted the issue at all. Investors who wanted to know have had to pass shareholder actions to get companies to tell. Ideally, this should not be the case.

Yesterday came the NUDGE. The SEC said that companies should include the following in their annual reports:

• Impact of Legislation and Regulation: When assessing potential disclosure obligations, a company should consider whether the impact of certain existing laws and regulations regarding climate change is material. In certain circumstances, a company should also evaluate the potential impact of pending legislation and regulation related to this topic.

• Impact of International Accords: A company should consider, and disclose when material, the risks or effects on its business of international accords and treaties relating to climate change.

• Indirect Consequences of Regulation or Business Trends: Legal, technological, political and scientific developments regarding climate change may create new opportunities or risks for companies. For instance, a company may face decreased demand for goods that produce significant greenhouse gas emissions or increased demand for goods that result in lower emissions than competing products. As such, a company should consider, for disclosure purposes, the actual or potential indirect consequences it may face due to climate change related regulatory or business trends.

• Physical Impacts of Climate Change: Companies should also evaluate for disclosure purposes the actual and potential material impacts of environmental matters on their business.

Say no more!