As an alternative to the pure-play carbon credit generation and trading companies such as Camco (London: CAO), EcoloCap Solutions (OTCBB: ECOS), and EcoSecurities Group (London: ECO), investors who are bullish on the future of carbon credit trading might also consider an investment in UK-based Climate Exchange (London: CLE). The accompanying charts highlight the six-month performance of Climate Exchange, the US Oil Fund ETF (USO), Camco, and the S&P 500 Index. Below the stock chart is a four-month chart of EU Allowances (EUAs) (82%) and Certified Emission Reductions (CERs) (18%), which represent the two most liquid and relevant means of trading carbon credits, which are tracked by the iPath Global Carbon ETN (GRN) at the indicated percentage weightings. The global carbon ETN also expects to incorporate new carbon credit trading vehicles as they become established, based on information provided at the product website .
As its name implies, Climate Exchange is engaged in developing financial exchanges that allow for the trading of environmental financial vehicles such as the carbon credits tracked by the iPath Global Carbon ETN. The Company’s three main businesses include the European Climate Exchange [ECX], the Chicago Climate Futures Exchange [CCFE], and the Chicago Climate Exchange [CCX]. The ECX operates an exchange for the European Emissions Trading Scheme while the CCFE handles environmental futures contracts in the US and the CCX operates the voluntary, contract-binding cap and trade system to reduce the emission of greenhouse gases.
Climate Exchange closed today at 1,645 pence with a market value of just over $1.4 billion (USD) and a robust stock price performance this year, as illustrated in the six-month chart. Last month, the Company reported increased trading volumes at its two primary exchanges (ECX + CCX) from the year-ago period as well as progress with international expansion plans into Canada and emerging markets such as China. Climate Exchange reported 1H08 trading volumes on the ECX gained 250% while volumes on CCX advanced nearly 400% versus the year-ago period. Morgan Stanley analyst Luciano Diana has a neutral rating and 1,900 pence price target on Climate Exchange -- viewing the Company as the largest pure-play exchange in an emerging and fast-growing market for carbon credit trading with major expansion potential in the US market despite the threat of nationalization of carbon trading in the domestic market.
$0.4989 (08/15/08)
