Perspective

Protecting American business interests has not panned out as a defense against Kyoto for the United States, and the primary reason is simple: The largest American businesses are global; they are already subject to carbon-related constraints in Kyoto countries where they do business. They also do business in California (which set its own carbon policies last year) and the twelve RGGI states in the Northeast (which formed the Regional Greenhouse Gas Initiative in 2005).

In the financial markets, disregarding environmental responsibility hurts companies, while private equity seeks greener pastures, and a sizeable carbon-trading market develops outside the United States.

"The carbon overlay to this investment opportunity is a potential $3 trillion commodity trading market," writes analyst Peter Fusaro in an energy industry newsletter published this morning. "It is now doubling outside the United States every year and was $25 billion for 2006. When the United States enters this market, and that is shortly, there will be an uplift in U.S. equity prices alone. In fact, Wall Street is beginning to revalue companies on their greenness." Fusaro is the founder of Global Change Associates, Inc., an energy and environmental advisory, and author of What Went Wrong at Enron.

Case in point: TXU, a coal-and-nuclear giant in the Texas energy market, was acquired by private equity firms. The deal brought an about-face in environmental policy for the company, which is suspending work toward eight coal-fired power plants, and funding alternative energy.

Meanwhile, Europe will place fuel economy and emissions restrictions on imported automobiles, a step that has opened more eyes to the fact that the rest of the world can, indeed, impose its will on the gorilla. And when it does, we can expect investors, companies, and the gorilla herself to move toward a more responsible future.