I stood about six feet from the porthole. Gary went for the handle. The handle must have been hot, because he could only grab it for a second before he had to let go. After three more taps, he'd lowered the handle enough to open the porthole's window.

Now I was looking straight into the furnace. The fire didn't flicker or dance. There were no different colors. The fire's color was so intense it was like looking at the sun through a pinhole camera.

I was looking into the furnace at Plant Scherer. Plant Scherer is the largest coal-fired power plant in the Western Hemisphere. Its furnaces run at 2,800 degrees Fahrenheit and burn 31,000 tons of coal every day.

Plant Scherer, which is just north of Macon, Georgia, produces 3,500 megawatts of power. That's enough electricity to power three cities the size of Macon.

Gary showed me the generators, the turbines, the cooling towers, and the coal pile. We stood on the roof of the power station – 14 stories up – and watched the trains unload their coal at the base of Plant Scherer's million-ton coal pile.

Inside the boiler house, the noise is so loud you have to wear earplugs... and the heat is so intense, I started sweating right away.

The smell reminded me of the engine room of a ship. I'm not sure if it's the grease, the steam, or the smell of steel pipes, but if you've ever toured the U.S.S. Intrepid in Manhattan or the H.M.S. Belfast in London, you know what I'm talking about. (In fact, Gary says they used to design power plants like ship's engine rooms. The only difference is, ships use steam to propel a screw instead of a turbine.)

The Plant Scherer tour was the most interesting tour I've ever been on. You just can't believe the scale. The turbine room was a mile long, for example. The cooling towers are 530 feet high. There are four of them. Each one evaporates 8,000 gallons of water into the atmosphere every minute.

Here's the thing: Power plants also release huge quantities of carbon dioxide into the environment. To put this into perspective, the global transportation industry is responsible for 14% of all the world's carbon emissions. That is every plane, ship, locomotive, truck, bus, and car on the face of this planet. The coal-fired power industry produces 24% of total carbon emissions.

Plant Scherer is No. 20 on the list of world power plants by carbon dioxide emissions... and the single largest source of carbon dioxide in North America.

CO2 is a greenhouse gas. Right now, politicians from the 36 developed countries that signed the Kyoto Protocol are fighting CO2 emissions. They do this by offering cash to businesses that cut the amount of carbon they release into the atmosphere. They call these subsidies "carbon credits." Carbon credits are convertible into cash.

As you'd expect, politicians are focusing these subsidies on the coal-fired power industry. Coal-fired power plants get huge rewards if they cut their carbon emissions. For example, in Europe, power plants are mixing wood dust with their coal. Wood is "carbon neutral" when it comes from sustainable forests. By burning wood in their furnaces, the power plants can earn millions of dollars worth of carbon credits without making any changes to their boilers.

While these subsidies are common in the rest of the world, here in the United States, they do not exist. That's because the United States is the only developed country that did not sign the Kyoto Protocol.

But things are starting to change...

Last year, the Energy Independence and Security Act of 2007 raised vehicle economy standards and set the target for biofuel production at 36 billion gallons by 2022.

I think clean-air regulation comes next. Politicians in America must have noticed how popular this movement is in Europe and how successful Al Gore's movie An Inconvenient Truth has been. I bet the United States government will start offering carbon credits sometime in the next five years.

Here in the South, wood pellets are the cheapest way for a coal-fired plant – like Plant Scherer – to reduce greenhouse gas emissions. I bet it's the same situation out West. If Congress enacted clean-air regulation, Plant Scherer would have to buy up to 4,000 tons of wood pellets every day – about equivalent to 300 log trucks.

This is the reason I like timberland as an investment. American timberland is the cheapest source of wood pellets. And as the global power industry starts buying more American wood pellets, timberland values are going to rise. If the American power industry starts competing for wood pellets too, there's going to be a huge bubble in timberland prices.

Good investing,

Tom