By Chris FloodWed Dec 5, 8:50 PM ET
Barclays Capital will launch on Thursday a new investment benchmark to tap into the rapidly maturing carbon trading market.
The Barclays Global Carbon Index (BGCI) will be made up of two sub-indices that track the performance of the carbon credits associated with the EU Emissions Trading Scheme and the Kyoto Clean Development Mechanism. As new schemes develop around the world, Barclays plans to incorporate them within the BGCI.
The EU scheme, launched in January 2005, is the most established scheme for carbon trading. European countries set annual allowances for the amount of carbon their industries can emit, and carbon trading allows polluters to purchase credits to offset excess emissions.
The UK has taken a global lead in the development of the carbon trading market. The London-based European Climate Exchange on course to reach 1bn tonnes of carbon traded this year.
"As we move towards the launch of the first phase of the Kyoto protocol and the second phase of the EU Emissions Trading Scheme, we expect the market to grow significantly as investors look to manage their risks and leverage new opportunities," said Louis Redshaw, Barclays head of environmental markets.
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