Well, you knew it was coming. The Australian Labor Party's Kevin Rudd is the new Prime Minister. His first order of business--and a large part of his platform--is to streamline his country's ratification of the Kyoto Protocol, leaving the US as the only major industrialized nation still abstaining from participation.

Now, I know Kyoto isn't everything. And every time I mention it, several of you write in to tell me about its flaws or about the countries that aren't going to meet their targets.

But if Kyoto isn't everything, at least it's something--a start, a beginning. A gateway to emissions mitigation and, for us, an opportunity to profit via the international carbon market.

Ultimately, it's the latter that makes me favorable to it, although its intentions and initiation of action aren't too bad either. Because, let's face it, regardless of my view--or yours, for that matter--on Kyoto, we're in this for the money.

So when I heard that Rudd's campaign hinged on taking immediate steps to curb climate change and that he was almost certainly going to win, you can bet I was more than a little excited. And, as it turns out, I had good reason to be.

On the election news, Australia's CO2 Group Limited (ASX: COZ) climbed 14% in one day of trading, powering to an all-time high. Rudd's election--and signing of Kyoto--will allow Australia to participate in regulated emissions trading systems instead of solely in voluntary and state-based programs.

The company's business centers around aggregating and selling carbon credits to corporations that are generated from the planting of mallee eucalypts. CO2 Group also sells personal carbon offsets.

And Rudd's election should serve to foster more opportunities for profit in the international carbon trading game.

The Future of the Carbon Market

The next major event affecting the carbon market will be the December meeting of the UN Climate Convention in Bali. The purpose of the meeting is to come up with an international agreement to fight climate change after the 2012 expiration of Kyoto.

We already know Australia will be there, ready to play ball. But what else can we expect from this meeting that is already getting so much attention?

For starters, I expect we'll see a fundamental shift in attitude from some formerly obstinate nations, including the US. In fact, the Midwestern Governors' Association recently agreed to cap greenhouse gas emissions and set up a trading scheme by 2010. That comes on the heels of two other governors' groups--the Northeastern and the Western--deciding to do the same thing.

Those three agreements mean that about half the US population has now circumvented the Bush Administration and implemented emissions reduction schemes. I predict we'll have capped emissions in less than a year's time.

The same thing is happening in Canada, where a number of provinces are evading Prime Minister Stephen Harper's recent rebuff to Kyoto commitments.

The developing world also seems a bit more accepting of emissions reductions. At the recent East Asia Summit in Singapore, China and India joined ten Southeast Asian countries plus Japan, Korea, Australia and New Zealand in supporting "a long-term aspirational global emissions reduction goal to pave the way for a more effective post-2012 international arrangement."

Hopefully, those are all indications of things to come in Bali, where other issues will also be debated, like making environmental payments to farmers that use less damaging practices like "shade-growing" coffee rather than energy-intensive and environmentally destructive methods.

It just so happens that Green Chip has such a coffee company in its portfolio already. An environmental payment would only serve to increase its value--and our profits. Not to mention the exponential increase in profit potential for the rest of our companies if a global greenhouse gas reduction program is agreed upon.

And if a worldwide paradigm shift in climate policy weren't enough, Swiss bank UBS recently raised its price forecast for European carbon credits (called EUAs) to 35 euros per metric ton by 2012. That comes after the EU carbon price just hit a five-month high of 23.75 euros per metric ton last week.

A price increase to 35 euros would mean over a 47% increase in current prices. And they're forecast to climb to 40 euros by 2013!

Under the European Union's Emissions Trading Scheme (EU ETS), companies that go over their emissions limit either have to curb their emissions or buy extra EUAs from more efficient companies.

We have some of those efficient companies in our portfolio right now. And we'll be adding more through our global trading arm, Green Chip International.

I'd suggest getting in before the price of carbon doubles. Plus, you'll get the name of the earth-friendly coffee grower.

To become a member today, click here.

Until next time,

Nick