If you haven't been following the debate surrounding capping and trading emissions, you're missing out. Not only does it have implications for how our nation produces energy, it has the potential to offer a myriad of opportunities for well-informed investors.

You see, California has been asking for permission to regulate greenhouse gas emissions since 2004, but the philistines at the Environmental Protection Agency (EPA) have yet to grant it permission to do so.

For quite some time the EPA's excuse was that they didn't have the power to regulate emissions. That's funny--greenhouse gases harm the environment and the EPA is supposed to protect the environment. Maybe they should consider a name change.

Now, back in April the Supreme Court ruled that the EPA did in fact have the authority to regulate greenhouse gas emissions. Like we didn't see that one coming.

After that decision, you'd expect everything to be rosy. But this administration doesn't make anything easy, even obeying Supreme Court decisions. So here we are, over two months since that decision, and the EPA still hasn't given California--and the eleven other states that would do so--permission to regulate emissions.

And while it would be nice to have the federal government's support, it looks like the rest of America is ready to move on without it.

Already, corporate behemoths like General Electric, DuPont and Johnson & Johnson have come together to form the United States Climate Action Partnership.

Even oil juggernauts like Shell, BP and ConocoPhillips have joined this coalition, which calls itself "an expanding alliance of major businesses and leading climate and environmental groups that have come together to call on the federal government to enact legislation requiring significant reductions of greenhouse gas emissions."

Now you can be certain the environmental groups that are a part of this alliance are there with pure intentions, but I'm willing to bet some of those companies are looking for a way to make a buck from the capping of emissions.

Here's why.

Europe has had a carbon market--surprise, surprise--for quite some time now. Each member state of the EU gets an annual emission allocation which is then divvied up among its worst emissions-producing companies.

The companies are then legally obliged to produce no more emissions than they are allowed. If a company comes in under target, it can sell its excess allowance as "carbon credits" to other firms that have overshot their targets. But if they exceed their target, they have to pay a penalty and then go to the market to buy credits to make up the difference.

Right now, with an abundance of carbon credits available, their price is relatively low. But with the second phase of the program, 2008-2012, just around the corner--bringing with it a reduced amount of credits and more stringent targets--the price of carbon credits is set to explode.

That means carbon trading is about to become big business, not only in the EU, but in the US as well--with or without the blessing of the federal government. In fact, the global carbon market is already worth well over $10 billion.

With that in mind, let's have a look at how to invest in the explosive carbon trading market.

The only pure play is to buy Certificates in Emission Reductions (CERs). However, the only way to do this currently is through an established carbon fund set up by huge capital firms. The most well-known firm that does this, Climate Change Capital, has a minimum investment of $33.3 million--leaving little opportunity for small investors.

Or you could invest directly in the company that owns the carbon exchange, Climate Exchange Plc. (LSE: CLE). If you'd done so a year ago, you'd be up over 540%. Have a look:

These guys cornered the market early. They even own the US exchange for trading carbon, the Chicago Climate Exchange (CCX).

But if those shares are too pricey--which I suspect they are--there's still hope for getting into the carbon market.

As the demand increases for trading carbon credits , many companies are coming on the scene that specialize in reducing emissions. These are companies that help reduce the overall emissions of a variety of businesses, like farms, factories and utilities.

After they reduce a company's emissions--and the results are verified by a third party--the resultant carbon credits are theirs to sell. I believe this is the best way to get into this new form of investing, because soon renewable energy companies that reduce emissions as an inherent part of their business will be able to sell carbon credits as a second source of income.

We'll be seeing profitability on two fronts. And we at Green Chip have already identified several ways to get a piece of this new bull market. Be sure not to miss out.

This thing is going to happen no matter what the Supreme Court or the rest of the federal government has to say about it. This is why we love a free market.

The Green Chip team is currently working on a new report highlighting opportunities in the carbon trading market. This report will be available to Green Chip Review members only. For a free membership to the Green Chip Review and to reserve your copy, click here .

Until next time,

Nick