Arguments around carbon regulation have been in and out of popular media over the past decade. While some form of pollution control is mandatory for the sustainability of our delicate environment, an ideal approach to face the issue has not yet effectively been implemented.

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Regulation
The American Clean Energy and Securities Act, passed in June of 2009, will impact the fundamental operations of numerous sectors. Clean energy, energy efficiency, reduced global warming pollution, transitions to a clean energy economy and an offset from domestic forestry and agriculture are the keynote issues addressed by the bill.

As the energy landscape changes, with $190 billion dollars being directed to green capital expenditure projects and emission caps becoming effective as early as 2012, investors should take note to rebalance their portfolio accordingly. (Sustainability and reducing environmental impact are hot corporate objectives. Find out why. Read For Companies, Green Is The New Black.)

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According to Investor Responsibility Research Centre Institute, up to 66% of S&P 500 companies may be "unprepared for mandatory reporting requirements." Oil refineries, chemical manufacturers, fertilizer and electric power companies, pharmaceuticals, sugar processors and other sectors are known to emit excessive amounts of carbon dioxide in addition to other hazardous pollutants.

Big Polluters
Dow Chemical (NYSE:DOW), for example, is engaged in manufacturing chemicals, plastics and pesticides, all of which are emission-heavy activities. DuPont (NYSE:DD) participates in many similar activities with its performance chemicals and agricultural segments coming under environmental scrutiny. In fact, Du Pont was awarded the number one spot on the Toxic 100 index with a "toxic score" of 285,661, while Dow, accumulating a score 189,673, came in third (toxic score = pounds released x toxicity x population exposure).

Archer Daniels Midland (NYSE:ADM), which is in the agricultural processing business, ranks between the two chemical manufacturers.

Surprisingly, according to the study, oil and gas firms do not have a heavy presence in the top 10 of the toxic index. ExxonMobil (NYSE:XOM), appears ninth on the list, carrying a score which is considerably less than Eastman Kodak (NYSE:EK) and Arcelor Mittal (NYSE:MT), which appear fifth and seventh on the list respectively. Arcelor produces carbon steel and stainless steel products, an industry known for wrecking havoc on the environment. Yet, although its sales are approximately 20% of those of the oil giant, Arcelor Mittal has a greater detrimental environmental impact.


Refineries are other big polluters which usually serve as the common scapegoat used by environmental advocates pressing for legislative green reforms. Investors should not only take note of the adjustments that energy companies will have to endure, but companies in other sectors as well.

Green Investing
In light of the push toward a cleaner, greener and more energy-efficient world, many companies will either have to merge or liquidate their assets if they are not able to afford proper infrastructure requirements. The looming future dictated by regulation will place a hefty financial burden on excessive polluters who will be forced to modify their equipment to the new standards. Simultaneously, the demand for green energy product alternatives will escalate. Such a scenario opens the door for investors wishing to capitalize on the clean tech revolution.

Currently, many corporations who focus on building new technology such as solar panels are in the infant stages of development. As a result, these firms are subject to increased risk due to the possibility of product failure or tight industry competition. Risk-adverse investors wishing to profit from the Waxman-Markey bill should consider adding green exchange-traded funds to their portfolio such as the PowerShares WilderHill Clean Energy (NYSE:PBW) ETF. (Put a little green in your wallet by investing in these growing areas. To learn more, refer to Top 10 Green Industries.)

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