UK Is Big Winner In New 'Carbon Market' Industry

"The United States, Europe and Japan are locked in a frantic race to cash in on the exploding business of saving the planet. London has become the center for the multibillion dollar market in carbon emissions, attracting investors who trade CO2 allowances."

"Britain has emerged as the clear leader in carbon fund management, with 72 percent of private carbon funds and 50 percent of all carbon funds being managed out of London, said New Energy Finance, a research house in London on the world's clean energy and carbon markets.

The City of London financial district has taken the lead in making billions from the management of CO2 emissions, one of the fastest-growing segments in financial services.

The carbon market was created after Europe signed the 1997 Kyoto agreement on curbing green house gases. In 2005, European governments started capping the amounts of carbon dioxide that industries could emit, while letting them buy and sell CO2 emission allowances.

The cap-and-trade system encourages factories and industries to cut emissions by giving them "pollution permits." If they produce less greenhouse gases than the total of their permits, they can sell the surplus certificates - also known as credits - to companies that find them cheaper than cutting their own emissions.

That created the fast-growing carbon markets, where certificates are bought and sold like a commodity. It also includes investments in projects that help to generate additional credits.

About $30.4 billion of allowances were traded last year, representing 1.6 billion tons of CO2, double the volume of 2005, said Point Carbon, a company of market analysts based in Norway."