It's a complex procedure, but essentially, trading creditsrevolves around the theory that some practitioners will be bettersuited to reduce carbon emissions than others. "The things you doto reduce emissions should be rewarded," said Peter B. Clarke,project manager for ICF International in Toronto. By way ofexample, Clarke continued: "Two entities each emit 30 tons of CO-2.Regulators dictate that the production of emissions be reduced by40 tons total. Entity B reduces emissions substantially, but EntityA is unable to do anything. Entity A can purchase emissions creditfrom B. B gets cash, A gets the allowance and emissions arereduced."

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Despite the voodoo-economics sound of the concept, there arereal income gains to be collected, said Paul MacGregor, an EVP withNeuwing Energy Ventures in Alpharetta, GA. While exact gains canvary, based on location and the efficiencies employed, "In thevolunteer market, it can be $5 per kilowatt hour," he stated. "Inareas with high CO-2 emissions, it could be three times thatamount." Spread over the breadth of a portfolio, the trades canmultiply into sizable income gains.

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The currency of sale here are Green and White Tags,certifications, essentially, from regulatory bodies that thesavings are real and accurate. The color codes represent the typeof greening application employed, such as lighting or solarpanels.

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"In the political context of climate change, this is a hugepolicy trend," stated Roger Platt, SVP and counsel for theWashington, DC-based Real Estate Roundtable. For utilities, energyefficiency is "a zero-sum game. We are in a position to create awin/win. Trading credits can add value to the utilities whilegiving us the opportunity to advocate for our stake in theclimate-change debate."

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Real estate, he pointed out, is responsible for 40% of thenation's energy consumption. "We can be portrayed as anotherDetroit," he argued, "or we can be portrayed as an industry on thecutting edge and helping to reduce climate change."

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John Salustri

John Salustri has covered the commercial real estate industry for nearly 25 years. He was the founding editor of GlobeSt.com, and is a four-time recipient of the Excellence in Journalism award from the National Association of Real Estate Editors.