Utah firm helps mitigate carbon emissions

Two high-profile capital investment firms are banking on a privately owned Utah company to help them become major players in the emerging greenhouse gas and carbon trading markets.

Since last summer, Goldman Sachs Group Inc. and Och-Ziff Capital Management Group LLC together have committed more than $1 billion to a Utah company called Blue Source LLC in an effort to establish a foothold in the potentially lucrative carbon-trading marketplace.

In August, New York-based Och-Ziff committed up to $500 million (with an additional $500 million available) for new greenhouse gas reduction projects to be managed in partnership with Blue Source.

Two months later, Goldman Sachs bought a minority stake in the Holladay carbon-management firm for an undisclosed amount. The deal represented an equity stake of less than 10 percent, said Bill Townsend, co-founder and chief executive officer of Blue Source. Townsend declined to comment on the financial terms of the deal.

"As European and now U.S. regulators adopt regulations addressing climate change and create a market for carbon, we are developing new products to address these new commodities risk to our clients," a Goldman Sachs spokesman said in an e-mail to the Deseret News regarding the decision to form a business alliance with Blue Source. "The alliance, which will offer our clients access to a diverse selection of emission reductions to manage their carbon risks, is one of the key components of our carbon strategy in the U.S."

As Utah and the rest of the nation consider ways to reduce its carbon footprint, companies like Blue Source have developed technologies that mitigate carbon emissions. Townsend said he is hopeful the U.S. will follow the lead of Europe, which has begun its own regulated carbon-trading market, permitting entities to buy and sell credits or reductions as a way to reduce the amount of greenhouse gas emissions into the atmosphere.

Though some analysts have supported the idea of a federally regulated American carbon-trading market, critics have expressed concerns about how well such a program would work when put into practice. Would it be administered fairly? And would trading carbon credits on the open market achieve the desired result of mitigating climate change and reducing the amount of pollutants in the air?

Regulating the market

Currently, there is no nationally regulated carbon-trading market, though companies are able to exchange carbon offsets on their own. A carbon offset is a financial instrument representing a reduction in greenhouse gas emissions.