Trading “Green” – The Global Carbon Index

13 Dec

BarcapI ran across an interesting press release from Barclays Capital today about their recent launch of the Barclays Capital Global Carbon Index (BGCI). It was also covered in various News Outlets:

This is the first time that such an index has been made available to asset managers, private banks and institutional investors, according to Barcap.

The Barclays Capital global carbon index (BGCI), intended as a benchmark for the rapidly growing carbon emissions markets, is made up of two sub-indices that track the performance of EUA credits in the EU emissions trading scheme (EU ETS) and Certified Emission Reduction (CER) credits generated by the clean development mechanism (CDM) [part of the Kyoto Treaty].

While my understanding of the financial markets is limited, this is an interesting innovation in that it will allow investors to buy into the growing market for “greenness” – the offsets and certified environmental upgrades of businesses.

It would seem that, certainly over the long term at least, truly environmentally-friendly business opportunities and technological advancements will continue to become scarcer and more difficult to achieve. For polluters needing to trade their carbon emissions with more “green” counterparts under increasingly popular carbon trading schemes (the US is set to follow in the EU’s footsteps here), selling “black” and buying “green” will only become more expensive with time.

A commodity with growing demand and increasing scarcity? Sounds like a good investment to me.

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