- European first for listed access to carbon emissions
- Simple and direct exposure on the London Stock Exchange
- ETC to track the world's most liquid carbon emissions futures contract
- European carbon emissions trading expands by 80% in 1H08 to EUR 30 billion
ETF Securities Limited (ETFS), the global pioneer in Exchange Traded Commodities (ETCs), will list the world's first Carbon ETC on the London Stock Exchange (LSE) in the dedicated ETC segment. ETFS Carbon offers investors, for the first time ever in Europe, the opportunity to gain simple and direct exposure to the carbon emissions allowance futures market. It is expected that the first day of trading will be Thursday 30th October.
ETFS Carbon (LSE Code: CARB) is designed to track the price of carbon emissions allowance futures and offers investors a total return*. CARB tracks the ICE ECX EUA Futures Contract traded in London on the ICE Futures Market - currently the most liquid exchange traded contract within the EU Emissions Trading Scheme ("EU ETS"). Each ETFS Carbon is initially equivalent to one emissions allowance; the holder of an emissions allowance owns the right to emit one tonne of carbon dioxide equivalent gas. On the LSE, ETFS Carbon will trade in both Euros (CARB) and also in British pence (CARP) on the London Stock Exchange. Each ETFS Carbon will begin trading at approximately EUR 18.37 (£14.74).
According to the Energy Information Administration (EIA), global CO2 emissions increased by approximately 32% from 1990 to 2005. Carbon emissions allowance trading markets have developed as part of the international response to concerns over the environmental effects of increasing global greenhouse gas (GHG) emissions, in particular carbon dioxide (CO2). The Kyoto Protocol (1997) provides a framework for the reduction of global GHG emissions through the establishment of emissions trading schemes. In January 2008, the European Commission announced proposals to improve and extend the EU ETS post-2012.
The EU ETS is currently the largest and most liquid GHG trading market, with approximately 80% of global turnover in CO2 allowances and credits in 2007. Total EU ETS trading activities were valued at approximately EUR 30 billion in the first half of 2008, equivalent to 750 million tonnes of CO2, an increase of 80% over the same period in 2007. Germany, UK and Italy are currently in the list of the top ten emitters in the world.
ETFS Carbon is the newest ETC to be added to the range of ETCs which are issued by ETFS Oil Securities Limited and which are backed by matching Energy Contracts purchased from an entity of Shell Trading. Shell Trading is the principal trading and shipping business within the Shell Group. ETFS Brent Oil 1mth (OILB) and ETFS WTI Oil 2mth (OILW) were the world's first oil ETCs when they first started trading in July 2005. Last year, ETF Securities added to the Oil Securities platform when six more ETCs were added, providing exposure to a range of both Brent and WTI dated oil contracts. In total, there are nine ETCs issued by ETFS Oil Securities Limited.
ETF Securities now offers more than 120 ETCs, issued by four different issuers, which give investors the flexibility to implement different investment strategies using physical, long, forward, leveraged and short exposures in a wide range of commodity sectors. ETCs are simple to access as they are traded in three currencies (USD, Euros and Sterling) and are listed on five major European Exchanges including the London Stock Exchange, Euronext Paris, Euronext Amsterdam, Deutsche Borse and Borsa Italiana. ETFS assets under management have grown to US$6.5 billion with trading volumes reaching over US$4 billion monthly.
Commenting on the launch of Carbon Securities, Nik Bienkowski, Chief Operating Officer of ETF Securities, said:
"We are very pleased to be able to offer the first carbon ETC in Europe. ETFS Carbon is an exciting new development for investors to gain exposure to the carbon emissions trading market through a listed product on the London Stock Exchange. This development recognises the rising importance of carbon emissions trading and more importantly global warming."
"ETCs were designed to be simple and accessible tools for all types of investors. Currently most investors cannot invest in carbon emissions allowance futures due to limited market access, but our response to this problem in the form of ETFS Carbon creates a practical and accessible answer for investors."
*Total return is the return that an investor can earn by holding a long only, fully collateralised position in commodity futures.
