The exchange traded fund (ETF) U.S. Oil Fund (USO) has slipped nearly 10% since late July and the exchange traded note (ETN) iPath Global Carbon (GRN) has gained almost that same amount. As mentioned in an earlier story, carbon trading has become more popular on a global level and companies are looking to take advantage.
Mike Havrilla for IndexUniverse looks at two different companies in explaining the jump for GRN. He first looks at Camco International (London: CAO.L) which recently recorded a $2.6 million profit on the sale of over 150,000 carbon credits. The certified emission reduction credits (CERs) were sold for over 19 euros, opposed to the average price of 7.5 euros per ton.
He also examines EcoloCap Solutions (ECOS) based out of Canada. This small U.S. traded company generates CERs in emerging and frontier markets, such as China and Vietnam. After generating these CERs at a below market cost, ECOS sells the credits at higher spot market prices in more developed countries such as the US.
As GRN and a number of different exchange traded products track carbon emissions, the price of this new commodity is likely to be significantly impacted by smaller companies like EcoloCap, being that there is such a small number of companies involved in this new market.
However, the head of environmental markets at Barclays Capital has predicted that carbon credits could become not just the biggest commodity in the world, but the biggest overall market, with some analysts estimating a market of nearly $1trillion within a decade.
Some other Alternative Energy/Clean Energy ETFs and their performance for the past month include:
- First Trust Nasdaq Clean Edge (QCLN), up 3.5%
- PowerShares Cleantech (PZD), up 2.7%
- Market Vectors Global Alternative Energy (GEX), down 4.1%
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.