It's an odd job, but somebody has to do it. Khurram Zia is an auditor of carbon credits, the tradable securities playing a growing role in the global effort to reduce greenhouse gas emissions.

"Everywhere I go, the topic is climate change," said Zia, speaking on the sidelines of a half-day seminar on the Middle East carbon market held in Dubai last month. "People are telling me: 'I have the money. How do I do it?' " "Doing it" in this case means investing in projects that cut pollution and bring in extra revenue in the process.

Some were surprised when EcoSecurities, a firm that specializes in carbon credits and the organizer of last month's conference, managed to pack the room with 56 Middle East executives, mainly from the energy industry. But not Zia, who knows the industry has finally caught the carbon-trading bug. "I was expecting it," he says.

"In the last four months, I've already signed four clients in the UAE and three in Pakistan." That's a level of sales he says he certainly didn't expect last year, when he stepped into his new job at Det Norske Veritas (DNV), an Oslo-based risk management consultancy that offers other services like ISO 9000 certification.

DNV hit the ground running on carbon trading, creating Zia's position – his formal title is business development and key customer manager for the Middle East – and clinching deals almost immediately with energy firms like the state-owned Abu Dhabi National Oil Company (ADNOC).

Zia's job is to verify and validate tradable carbon credits. Just to give an idea of the money that's at stake, by one informed estimate Qatar Petroleum's carbon credits should earn the company $32 million annually through 2012. Carbon credits are essentially permits to pollute – with a free-market twist.

The "cap and trade" system introduces flexibility into what would otherwise be a hidebound restriction on the volume of greenhouse gasses a company can release into the atmosphere. Governments set a cap, and companies are fined if they exceed that limit; but if a firm thinks it can make more money by emitting more, it can buy credits from a company that falls under its cap.

Carbon trading is a product of the "cap and trade" approach to controlling emissions formalized by a 1997 addendum to the United Nations Framework Convention on Climate Change, a contentious bit of paperwork now famously known as the Kyoto Protocol that sets global and national caps.

Though some environmental groups who are wary of the free market's creep into the domain of public policy have criticized emissions trading, the business has taken off. Previously seen as a niche security, in recent years carbon credits have emerged as a mainstream commodity traded like oil futures.

Carbon trading has also received the Al Gore stamp of approval, with the Nobel laureate championing the system as one tool to fight global warming. Who would have thought? An oil-rich, air-conditioned desert country swimming in sovereign wealth, home to notorious energy guzzling projects – think Ski Dubai – and said to have the largest per-capita carbon footprint in the world.

One might guess there would be easier places to start if you're trying to drum up support for greenhouse gas reduction. But EcoSecurities CEO Brian Usher says he's been pleasantly surprised by the enthusiasm Dubai has shown for carbon trading. "The level of interest is much higher than I would have guessed," Usher told TRENDS as EcoSecurities wrapped up last month's conference.

"If we'd done this event two years ago, there would have been little interest. It's a very innovative region, and our experience is that there are three things you need [to initiate carbon trading]: You need technology, capital and innovation. You have those three things here."

Here is where a varied team of specialists enters the picture. There are "originators" like EcoSecurites, which advises companies on implementation before buying the credits and then re-selling them to firms in Europe, Japan and elsewhere. And there are third-party auditors like DNV.

EcoSecurities used the Dubai seminar to announce the official opening of its Middle East branch office, even though it has been operating quietly here for a year. Its commercialization team in Oxford, UK, handles the largest pool of credits in the world. Buyers include firms that have made big marketing splashes by turning "carbon neutral" as corporate social responsibility (CSR) initiatives – such as HSBC, Yahoo and Google – and industrial companies who buy credits to dodge fines.

A carbon neutral model. Global warming is truly a global issue. If a cement plant is belching CO2 into the air, it matters little if that plant is located in Brazil or Belarus; the market has no geographical limitations. So developing countries (which, for these purposes, includes the Gulf states) are increasingly cashing in.

 The main criterion in getting the UN stamp of approval is proving "additionality" – that is, that a company or industry has reduced greenhouse emissions using steps it would not have otherwise taken in the normal course of business.

A single credit represents one metric ton of CO2, or its equivalent in other greenhouse gases, and varies in market value between $20 and $40 depending on the type. "The Middle East is the primary source of energy in the world today, so you can't address global greenhouse gas emissions without figuring out how to reduce emissions in the region," Usher said.

There are a number of simple ways this can be done: He cites the reduction of flaring – a process common in oil and gas extraction whereby excess natural gas is ventilated and set ablaze. There are more environmentally friendly ways to handle the build-up, such as technology that can recapture the fuel emitted.

The problem is that in the past, firms simply haven't had enough of a financial incentive to implement such emissions control measures. It's cheaper just to light the stuff on fire. "If it already made sense, it would have been done already," Usher explained.

"Until recently, there was no concern." He flew in for the event from New York, a fact that might seem at odds with the eco-friendly theme. But EcoSecurities says they modeled their event to be "carbon neutral," at least as far as transportation goes. The firm calculated the amount of greenhouse gases likely to be emitted by those traveling to the seminar and retired an equivalent number of credits from its pool.

These credits may have originated at a wind farm in Turkey, for instance, and normally would have gone to other buyers that are hoping to go carbon neutral. Ironically, EcoSecurities sees the biggest opportunity in the Middle East in Turkey, a country that is not even a signatory to the Kyoto Protocol. There, companies have been aggressive in generating so-called "Voluntary Emissions Reductions" (VERs), which are essentially the same as Certified Emissions Reductions (CERs) but for various reasons lack full UN certification. VERs cost about half what CERs do, and are a rich source of credits for companies looking to reduce their footprint. (Carbon credit specialists seem to live in a world swirling with acronyms.)

Making friends. EcoSecurities' local strategy seems to be one of making friends in the right places, and sharing the revenue generated from carbon trading. It has teamed up with the Dubai government-owned Dubai Multi Commodities Centre in what Souheil H. Abboud, the firm's Middle East regional manager calls a "strategic affiliation" to scout for credit-producing projects. "They had the infrastructure, and we had the know-how," Abboud says.

"We have the global understanding and connections to make these projects happen." The two entities have an arrangement to share revenue from the credits generated, the details of which have not been disclosed. Both are also working with Dana Gas and Crescent Petroleum to generate credits from the firms' own projects and look for opportunities with other firms. EcoSecurities has a number of projects in the pipeline and hopes to have the GCC's first carbon credits generated and sold by the end of 2008. The firm has a deal with Zero Waste in Bahrain to buy credits from a project cutting down on emissions generated by a municipal solid waste facility. It has also signed purchase agreements with Jordan's Central Electricity Generating Company (CEGCO) to buy credits created by shifting from heavy fuel oil to natural gas, and with a landfill in Ras al Khaimeh. EcoSecurities also signed a memorandum of understanding with Tatweer, a member of Dubai Holding, on another municipal waste project, and is advising the Saudi government in setting up a government agency for clean development projects. "We're not seeing a lot of completion here, locally, yet," says Abboud, although he cites Masdar, the Abu Dhabi government's environmental initiative, as one potential competitor for credit purchasing. But without a single credit generated yet, it may be early to talk about rivalry. No pretense. Still, there's rarely any pretense that such firms are doing this out of the goodness of their hearts. "A lot of companies will say, 'Listen, unless I have a financial incentive, what am I going to do it for? The returns are low. To me, it doesn't make sense. I could continue polluting,'" says Abboud.

"The whole concept behind the Kyoto Protocol is to force certain economies to lower their emissions while giving financial incentives to other economies, which cannot be forced into doing it, to implement environmental projects." That's what Kyoto does: it give polluters a sweetener to reduce emissions. After all, it's not easy being green.