This month we’ve worked overtime to assemble two extended features looking at significant economic events in 2007. The first details the wave of Middle Eastern petro-euros washing up on European shores, and the second concerns the business of climate change. The two subjects are not entirely unrelated, given that oil money is starting to fund alternative energy technologies and that Arab money is partly behind the current boom in private equity.

Our second Top 50 Low-Carbon Pioneers List is headed by Low Carbon Accelerator, the first pure-play, low-carbon private equity company. Its closest competitor is the Abu Dhabi Future Energy Company, in 19th place. It might ruffle the feathers of some environmentalists to discover that oil money will be funding solar panels, but there is no room for purity when climate change is such an urgent problem. And urgent it is – James Lovelock, the controversial scientist whose Gaia thesis insists that the planet is a self-regulating biological entity rather than the sum of disparate and discrete mechanisms, believes that “our future is like that of the passengers on a small pleasure boat sailing quietly above the Niagara Falls, not knowing that the engines are about to fail”. Or, to quote Al Gore addressing the politicians who are failing us: “The maximum that seems politically feasible still falls far short of the minimum that would be effective in solving the crisis.”

The only solution is to price carbon so as to reflect the true cost of carbon emissions (see chapter 6 of Joseph Stiglitz’s Making Globalisation Work).

This would bypass the urge of governments to meddle in private affairs, allowing a market solution to global warming.

This global pricing solution actually does not require a global agreement – in fact it already exists, not just regionally in terms of the EU Emissions Trading Scheme (EUETS) but because last month the price of carbon emissions reduction exceeded that of European allowances for the first time.

As Karen McClellan, head of asset management at Carbon Capital Markets, asserts, “this indicates a global market and price-setting mechanism beyond the EUETS”. McClellan also observes the willingness of different investors to pay “high prices for small amounts of carbon purchased in the voluntary sector”, or so-called “gourmet carbon”, suggesting that voluntary and regulated carbon markets may complement rather than conflict witheach other in the future. Who would have imagined that a “luxury” carbon market would spring up, commanding premium prices for what is to most people a commodity they cannot even see? It gives one reason to hope – as does this months’ cover story on Bang & Olufsen. The continued sucess of the Danish company demonstrates that a growing number of customers worldwide still warm to made-in-Europe luxury – as long as they can afford the prices. Enjoy.

Richard Lofthouse
Editor
richard.lofthouse@cnbceb.com