BARCLAYS BANKING ON THE CARBON TRADE

Barclays taps into demand for global carbon market
Jane Merriman (with Barbara Lewis), February 19, 2007 (Reuters via Washington Post)

- Barclays Capital is to launch what it says is the first global investment tool to tap investors' growing appetite for exposure to trading in greenhouse gases.
- Barclays' new tracker, set to launch soon, also illustrates the growing diversity and sophistication of commodity and energy investment products.
- Torsten de Santos, head of commodity investor solutions at Barclays Capital, said the tracker was the first of its kind on a global scale…


- The World Bank estimates global trade in carbon dioxide (CO2), the main greenhouse gas, was worth more than $20 billion last year.
- The European Union already has a carbon trading market, where companies trade credits that allow them to emit carbon dioxide…
- There is growing pressure from industry players and some governments for an emissions trading market on a global scale…Jeroen van der Veer, chief executive of Royal Dutch Shell called for a global "cap and trade" system as a way to cut carbon emissions…Exxon Mobil chief executive Rex Tillerson has also urged countries to work together toward a global policy to fight climate change…

- The new product is essentially an index tracker, but one designed to track the price of global emission credits…
- Commodities investment has mushroomed from $5 billion in 1999 to around $120 billion…Traditionally investors have used indexes, or baskets of commodities, to gain exposure to the raw materials assets class, but now there is a host of tailor-made products that can generate returns regardless of market direction.
- Barclays Capital has by far the largest share of the commodities structured products market and…[there is] massive investor interest in new environmental markets such as carbon and biofuels…