When we think of energy, we don’t immediately think of wood. However, the timber industry and related exchange traded funds (ETFs) are garnering more attention as electricity producers seek alternative energy sources.

State mandates and Congressional bills are encouraging the use of renewable energy, which has caused a jump in interest in wood to generate electricity, reports Traci Watson for USA Today.

Construction of electricity power plants based on wood have been on the rise. Current power plants burn bark, twigs and other waste wood from paper and timber mills, but if wood power grows, whole trees will probably be needed for fuel. (Read more about utilities here).

Demand for whole trees would not result in large-scale clear-cutting or more conversion of natural forests because of current laws and policies that protect the environment.

The Department of Natural Resources released a recent quarterly Economic and Revenue Forecast that reports an auspicious turn for the timber industry, writes George Erb for Puget Sound Business Journal. Some indicators are off their nadir, with housing, up 9% from the previous quarter, and timber prices, up 28% since April.

For more information on the timber industry, visit our timber category.

  • Claymore/Beacon Global Timber Index (NYSEArca: CUT): up 50.7% year-to-date

ETF CUT

  • iShares S&P Global Timber & Forestry Idx (NasdaqGM: WOOD): up 29.5% year-to-date

ETF WOOD

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.