During recent market turmoil and a meltdown in commodities , the Global Carbon ETN (GRN) has held up better than oil (USO) and natural gas (UNG), but fared slightly worse than the overall market as illustrated in the accompanying three-month chart. Key factors in the demand for carbon credits include overall power demand and the relationship between natural gas and coal prices since burning gas results in the release of less than half of the greenhouse emissions versus coal. Currently, the simplest way for power utilities to reduce greenhouse emissions is to convert from coal to gas. With the price of coal easing over the past few weeks, demand for more carbon credits resulted; although this effect was mitigated by a sharp decline in natural gas as well which has dropped even more than crude oil. Some notable movers in the Global Carbon Trading Index which have bucked the overall market downturn include Clean Energy Fuels (CLNE), Camco (London: CAO), and Trading Emissions (London: TRE). Camco has successfully completed several carbon credit auctions while Clean Energy Fuels has been rising on the prospect for using natural gas as a cleaner, alternative fuel for vehicles as part of The Pickens Energy Plan.
Overall, the index is down by 3.3% in the last month, which is better than the S&P 500 ETF (SPY) and other benchmark alternative energy funds such as PowerShares Clean Energy (PBW) and Market Vectors Alternative Energy (GEX). Since diverging from oil and natural gas in late July, the Global Carbon ETN has trended lower with other commodities but its downturn has not been as severe -- offering investors the potential for a new type of commodity that may prove to be partially correlated to energy commodities because of its unique characteristics as an economic incentive to curtail air pollution.
$0.55 (09/11/08)
