ENERGY FUNDS
physical market, we are talking about a very significant marketplace
Green Investment Opportunities
for carbon trading and asset management.
I recently spoke at the Managed Funds Association (MFA)
Another positive ingredient in the market’s development (to throw
annual meeting in Chicago on green investment opportunities.
in with carbon) is socially responsible investing with sustainable
The MFA is the premier association for hedge funds, and the
returns (SRI). Carbon could become the mother of all commodity
participants are very senior management and run big portfolios.
markets due to the cross commodity arbitrage between fossil fuel
I was bowled-over with the enthusiasm for carbon trading in the
energy contracts (oil, gas, power and coal) and agricultural com-
ethanol capital of the world, and centre of the agricultural
modities. That brings in exchanged traded futures contracts at the
commodity world. Everyone now wants in and that’s a good
CME Group, the Chicago Climate Exchange, the New York Mercantile
thing. But I always say “Get to know your risk!”
Carbon is the most complex commodity market ever created,
Exchange and the IntercontinentalExchange, to name a few. Add in
and the money guys and gals are now extremely interested in
OTC clearing and global commodity market linkages, and you see
deploying capital into the sector.
sizable global scale for this market maturation trajectory.
Carbon is the new gold and the next financial marketplace. Today,
That applies to carbon dioxide, sulphur there are over 60 carbon funds, with 3 multi-billion funds in that
dioxide (the cause of acid rain) and group (RNK Capital, Climate Change Capital and Natsource), and
nitrous oxide (the cause of ozone deple- three fund-of-funds (Kenmar, RMF & Parker Global Strategies) that
tion) trading. However, the size of this we are aware of. We expect many more environmentally focused
market opportunity is immense. Carbon hedge funds and fund-of-funds to develop.
as a commodity will trade at least US$3
trillion and probably more. A back of the
A back of the envelope estimate is that today’s
envelope estimate is that today’s car-
carbon footprint of 27 billion metric tonnes (CO
2
bon footprint of 27 billion metric tonnes
equivalent) creates an US$800 bn market
(CO
2
equivalent) creates an US$800 bn
market, [multiply that amount by However, the problem facing this new market is not lack of capital,
US$30–40 per tonne and that gives you but lack of good managers. One senior banker recently commented
the market size]. Since commodities to us that carbon markets are pure “information arbitrage” – which
usually trade 6–20 times the underlying means those with the best access to information will achieve superi-
REFF - The world's leading forums for Renewable
Energy financiers, developers and manufacturers
Future REFF Events
London
24-25 Sept 2007, London
India
29-30 Nov 2007, New Delhi
Asia
January 2008, Singapore
South America
April 2008, Rio de Janeiro
China
May 2008, Beijing
Wall Street
18-19 June 2008, New York
London
22-23 Sept 2008, London
www.euromoneyenergy.com
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96