BusinessWeek . Feb 07
Ways to invest in environmentally focused vehicles are still limited, and portfolios may harbor a few surprises—like oil and casino stocks
by Alex Halperin
Green investing isn't such a lonely pursuit anymore. With society's greater emphasis on renewable energy sources and technologies to limit greenhouse gas emissions—witness Al Gore's conquering-hero status at this year's Oscar awards as he picked up a statuette for his climate change documentary An Inconvenient Truth—there is increasing attention paid to this approach.
Unfortunately for investors, mainstream enthusiasm for green companies doesn't always translate into the green that lines wallets. But green is a term that's open to interpretation. Take General Electric (GE). Although the conglomerate has a leading position in green energy like wind power, some of its operations infuriate environmentalists. Meanwhile, small pure-play companies can't turn a profit. Wading into the green pool, investors may find it safer to play diversified indexes and mutual funds rather than pick out the eventual winners in a crowded field.
There aren't too many green stock indexes, ETFs, and mutual funds available to American investors. More surprisingly, funds that proclaim themselves eco-friendly sometimes have radically different investing philosophies. And because renewable fuels still hold a tiny share of the market compared to, for example, oil companies, their shares can be wildly volatile. Entering the fray, Standard & Poor's last week started the S&P Global Clean Energy Index. (S&P is owned by BusinessWeek.com parent The McGraw-Hill Companies(MHP).)
"Like a lot of investments it depends on who you are and why you're using them," says William Rocco, an analyst with Morningstar (MORN). He think green investing vehicles work best as smaller riskier bets—the spice to an otherwise solid portfolio—warning that "trendiness in these kind of things makes me worried."
To help sort the out the opportunities in this intriguing corner, this week's Five for the Money takes a look at some of the options out there. As usual, investors should be careful: Saving the planet and improving your retirement aren't necessarily compatible goals.
1. Sierra Club Stock Fund
When investors think of mainstream green investing, the Sierra Club Stock Fund (SCFSX) is probably pretty close to what they have in mind. The fund filters almost 2,000 large companies according to rigorous criteria. It eliminates companies involved in practices including nuclear power, tobacco, fossil fuel extraction, and agricultural practices like "concentrated animal feeding" and developing genetically modified organisms.
Of the few hundred names that survive the screen, the fund picks out the largest 100, according to Garvin Jabusch, director of sustainable investing at Sierra Club Mutual Funds.
As in many green funds, smokestack-free sectors like financials, health care, and tech feature heavily in the portfolio. But taking a look at some of the largest holdings can help explain why green investing isn't so cut-and-dried. As of Jan. 31, two of the largest five holdings in the portfolio were casino giants Las Vegas Sands (LVS) and MGM Mirage (MGM). Even for those socially conscious investors willing to invest in gambling, one could argue that the choices look counterintuitive. Without major online operations, these companies' revenues depend on millions of tourists flying and driving long distances, each contributing their bit to climate change. It also doesn't consider the juice needed to light the Las Vegas strip. This would seem to contradict the fund choosing to hold no car manufacturers and only one airline, Southwest (LUV).
2. PowerShares WilderHill Clean Energy
Without fossil fuels or mining outfits, the Sierra Club fund is missing out on a major slice of the economy, even if it is a sooty one. For exposure to energy it has a small stake in PowerShares WilderHill Clean Energy (PBW), an exchange-traded fund with wide exposure to some of the new technologies.
Jarbusch assumes that eventually renewable energy will boom. However, "it's very difficult to pick out not just the companies that are going to be the biggest winners but even the industries that are going to be the biggest winners." With exposure to more than 40 companies in areas like ethanol, solar power, and fuel cells, this clean-energy fund is playing the field before some of them have even turned a profit. In addition to holding small companies in a specialized space, the fund price tends to fluctuate with oil prices. Not for the faint of heart.
3. Green Century Balanced Fund
The Green Century Balanced Fund (GCBLX) is a more conservative option. This mutual fund screens out fossil fuel and nuclear energy companies while seeking to inject money into those outfits striving to improve their practices and develop cleaner technologies.
"Renewable energy is becoming a very real industry" says Eric Becker a portfolio manager for the fund from Trillium Asset Management. "It's only going to get better." Even so, Becker acknowledges that it hasn't anywhere near the type of presence as traditional energy producers.
The fund tries to provide a solid holding that will capitalize on growing sectors like solar and geothermal energy. As of the end of 2006, it had an average annual return over the last five years of 2.9%, after fees. Perhaps reflecting increased interest in renewables, last year the fund saw a 7.75% return.
4. iShares KLD Select Social Index
At the moment socially responsible investing covers far more than green investing. There are various so-called socially responsible instruments that do everything form omitting alcohol and tobacco companies to favoring outfits that offer strong benefits packages. Some tilt more toward the environment. Of these, investors might want to consider the iShares KLD Select Social Index (KLD), which aims to mimic the Russell 1000 index with a stronger green emphasis than socially responsible peers.
Morningstar analyst Marta Norton says this nod toward green is a stronger foundation than, for example, a basket of volatile green-energy stocks. Norton says she has "no inherent bias" against the renewable energy sector but "in the ETF world some of these narrower-sliced funds will be a little tougher to hold." As is typical for a mainstream socially responsible fund, KLD leans heavily on the tech and financial sectors.
5. Claymore LGA Green ETF
To many, this green exchange-traded fund (GRN) won't sound green at all. The fund tracks the performance of the Light Green Advisors's Light Green Eco*Index, which attempts to produce an environmentally sound stock index weighted toward the best performers in each sector of the economy. Theoretically, at least, it can play the same part in a conservative stock portfolio as a standard index fund. To do that the index has to make some controversial choices.
Many green investing products eschew fossil fuel companies entirely, but the Light Green index is weighted more on Exxon Mobil (XOM) than any other company. For many environmentalists, the oil giant is a poster child for industry-trampling ecology. Jonathan Naimon, managing director for Light Green Advisors, says "we're more interested in environmental performance than environmental speech." Despite the company's soiled reputation—a lasting residue of the 1989 Valdez spill—Naimon says Exxon's environmental practices are better than those of competing energy behemoths. And he argues that it's naive for even a green fund to ignore the energy business. "The oil industry is real," Naimon says. "It's a major part of the world."
Wal-Mart (WMT), another company notable for its absence from most green funds, is also in the index's top 10. As a whole, Naimon says, companies with good or improving practices should be rewarded. Of course, the presence of Exxon and Wal-Mart shows that even eco-conscious funds may have to wander from the greenest fields to find decent returns.
Halperin is a reporter for BusinessWeek.com in New York.
NEWS - Commodites, Agriculture, Green Investment - NEWS
12/25/2008
Saving the planet, one contribution at a time
Environmental investing isn’t a huge trend yet. But it’s growing, writes D. GRANT BLACK
Recent opinion polls show that the environment is the No..1 issue in Canada. But are Canadian investors buying “green” mutual funds to match their environmental zeal?
The short answer is no, or not yet anyway. Canadians may be Kyoto keeners, but when it comes to green investing we haven’t yet caught up to our American neighbours.
“Green funds” are mutual funds that invest in environmentally friendly companies, such as those involved in clean energy (wind, solar, biomass); or in progressive companies that use environmental technology to reduce greenhouse gases in industries such as oil, gas, coal and mining.
Toronto-based Jantzi Research, an independent investment research firm that screens companies for their environmental, social and governance performance, studies U.S. and Canadian investment patterns. According to Jantzi, U.S. mutual funds with green leanings total $2-trillion and account for about 10 per cent of total investments in that country.
Green Century Capital Management, for example, was founded in Boston in 1991 by non-profit environmental advocacy groups. Its Green Century Funds, which invest in companies of all sizes but with an emphasis on large caps, are among a small number of U.S. fund families that focus on green investing.
“Our intention is for the fund to be a balance of really progressive companies and those that are trying to lead their sectors in improving their environmental impact,” says Ethan Berkwits, vice-president of marketing for Green Century Funds.
Even when Canada’s much smaller population is factored in, investments here lag far behind in this area. In all, about $65.5-billion, or three to five per cent of total Canadian investments, are in funds devoted to socially responsible investing (SRI).
Canadian chartered banks do not offer green or ethical funds. Instead, the funds are sold at credit unions, where only 4.9 million Canadians do their financial business, or through a small number of independent SRI investment advisers, meaning that many investors may have limited knowledge about green-fund options.
More importantly, there are only a handful of “purely green” funds in Canada amid a myriad of other SRI and conventional funds.
Canada’s three most prominent SRI companies — Ethical Funds Company, Inhance Investment Management and Meritas Mutual Funds — all offer mutual funds with environmental components, but none are stand-alone green. But green investors can find such options elsewhere to add to their RRSP portfolio.
For example, Desjardins Environmental Fund is the oldest of Canada’s green funds and has assets of $106-million. Companies in its top 10 include Suncor Energy, Teck Cominco, EnCana Corp. and Alcan Inc. Established in 1990, the fund has been a good performer. As of Oct. 31, 2006, it had returned 24 per cent in one year, 20 per cent in the past three years, and 14 per cent over the past five years.
Acuity Investment Management, meanwhile, offers three purely green funds in addition to conventional investing options. Its Clean Environment funds invest in companies involved in wind and solar power, wastewater management, and clean technologies for the Alberta tar sands, for example.
Acuity’s Clean Environment Equity Fund looks for securities that fit the fund’s concept of sustainable environmental development, as well as financial strength and above-average growth potential. Two of its holdings are Suncor Energy and Montreal-based Groupe Laperriere & Verreault, which offers technologies that separate liquids and solids. With assets of $83-million, Clean Environment Equity Fund returned 7.7 per cent in 2006, 11.7 per cent over the past three years, 7 per cent over the past five, and 8.7 per cent since inception in 1991.
Another option is to invest directly in a renewable energy company. Clean Power Income Fund, which was launched in 2001 and trades on the Toronto Stock Exchange, invests solely in renewable energy, such as wind, solar, water, wood waste and landfill gas. Its dollars are at work, for example, in the building of the $186-million Erie Shores Wind Farm in southern Ontario, which stretches 29 kilometres along Lake Erie’s north shore. Clean Power Income Fund generated 4.4 per cent in 2006, 9.8 per cent in 2005, and 8.5 per cent in 2002.
Martin Grosskopf, associate portfolio manager and manager of sustainability research with Acuity Investment Management, says the interest in green mutual funds is on the rise.
“We’re being asked more about these funds in our institutional business from sophisticated investment committees. That’s a good indication that the retail market is likely to follow as well,” says Mr. Grosskopf.
Some investors are already matching their investments to their ethical principles.
Two years ago, Tina Bax, a 37-year-old entrepreneur in London, Ont., switched her entire investment portfolio to SRI mutual funds. So did her husband Michael, a 39-year-old self-employed graphic designer.
Meritas Mutual Funds is the only fund group in Ms. Bax’s portfolio, which saw a 15-per-cent return last year. She notes that Meritas offers six funds, all investing in environmental companies.
Her investments aren’t easily divided into “green” and “ethical” categories, she says. “It’s impossible to separate them,” says Ms. Bax, who operates Culture Works, a private English-as-a-second-language school with 20 employees and an SRI pension plan.
“I think people do this because it’s a lifestyle choice,” she added. “You won’t find socially responsible investors who don’t recycle, who don’t give money to charity or don’t volunteer.”
Brian O’Neill agrees. He’s the senior fund analyst at Morningstar Canada, a leading investment fund research firm that screens and tracks about 50 Canadian SRI funds.
“I think the two tend to come hand-in-hand ..... For most SRI funds, we’ll look at environmental screens as well. It’s very unusual for investors to want a social screen, but not an environmental screen,” he says.
“If the environment continues to be the most important issue for Canadians,” he added, “then we’ll see more [mutual fund] offerings out there and see more money flowing into them.”
Special to The Globe and Mail
Recent opinion polls show that the environment is the No..1 issue in Canada. But are Canadian investors buying “green” mutual funds to match their environmental zeal?
The short answer is no, or not yet anyway. Canadians may be Kyoto keeners, but when it comes to green investing we haven’t yet caught up to our American neighbours.
“Green funds” are mutual funds that invest in environmentally friendly companies, such as those involved in clean energy (wind, solar, biomass); or in progressive companies that use environmental technology to reduce greenhouse gases in industries such as oil, gas, coal and mining.
Toronto-based Jantzi Research, an independent investment research firm that screens companies for their environmental, social and governance performance, studies U.S. and Canadian investment patterns. According to Jantzi, U.S. mutual funds with green leanings total $2-trillion and account for about 10 per cent of total investments in that country.
Green Century Capital Management, for example, was founded in Boston in 1991 by non-profit environmental advocacy groups. Its Green Century Funds, which invest in companies of all sizes but with an emphasis on large caps, are among a small number of U.S. fund families that focus on green investing.
“Our intention is for the fund to be a balance of really progressive companies and those that are trying to lead their sectors in improving their environmental impact,” says Ethan Berkwits, vice-president of marketing for Green Century Funds.
Even when Canada’s much smaller population is factored in, investments here lag far behind in this area. In all, about $65.5-billion, or three to five per cent of total Canadian investments, are in funds devoted to socially responsible investing (SRI).
Canadian chartered banks do not offer green or ethical funds. Instead, the funds are sold at credit unions, where only 4.9 million Canadians do their financial business, or through a small number of independent SRI investment advisers, meaning that many investors may have limited knowledge about green-fund options.
More importantly, there are only a handful of “purely green” funds in Canada amid a myriad of other SRI and conventional funds.
Canada’s three most prominent SRI companies — Ethical Funds Company, Inhance Investment Management and Meritas Mutual Funds — all offer mutual funds with environmental components, but none are stand-alone green. But green investors can find such options elsewhere to add to their RRSP portfolio.
For example, Desjardins Environmental Fund is the oldest of Canada’s green funds and has assets of $106-million. Companies in its top 10 include Suncor Energy, Teck Cominco, EnCana Corp. and Alcan Inc. Established in 1990, the fund has been a good performer. As of Oct. 31, 2006, it had returned 24 per cent in one year, 20 per cent in the past three years, and 14 per cent over the past five years.
Acuity Investment Management, meanwhile, offers three purely green funds in addition to conventional investing options. Its Clean Environment funds invest in companies involved in wind and solar power, wastewater management, and clean technologies for the Alberta tar sands, for example.
Acuity’s Clean Environment Equity Fund looks for securities that fit the fund’s concept of sustainable environmental development, as well as financial strength and above-average growth potential. Two of its holdings are Suncor Energy and Montreal-based Groupe Laperriere & Verreault, which offers technologies that separate liquids and solids. With assets of $83-million, Clean Environment Equity Fund returned 7.7 per cent in 2006, 11.7 per cent over the past three years, 7 per cent over the past five, and 8.7 per cent since inception in 1991.
Another option is to invest directly in a renewable energy company. Clean Power Income Fund, which was launched in 2001 and trades on the Toronto Stock Exchange, invests solely in renewable energy, such as wind, solar, water, wood waste and landfill gas. Its dollars are at work, for example, in the building of the $186-million Erie Shores Wind Farm in southern Ontario, which stretches 29 kilometres along Lake Erie’s north shore. Clean Power Income Fund generated 4.4 per cent in 2006, 9.8 per cent in 2005, and 8.5 per cent in 2002.
Martin Grosskopf, associate portfolio manager and manager of sustainability research with Acuity Investment Management, says the interest in green mutual funds is on the rise.
“We’re being asked more about these funds in our institutional business from sophisticated investment committees. That’s a good indication that the retail market is likely to follow as well,” says Mr. Grosskopf.
Some investors are already matching their investments to their ethical principles.
Two years ago, Tina Bax, a 37-year-old entrepreneur in London, Ont., switched her entire investment portfolio to SRI mutual funds. So did her husband Michael, a 39-year-old self-employed graphic designer.
Meritas Mutual Funds is the only fund group in Ms. Bax’s portfolio, which saw a 15-per-cent return last year. She notes that Meritas offers six funds, all investing in environmental companies.
Her investments aren’t easily divided into “green” and “ethical” categories, she says. “It’s impossible to separate them,” says Ms. Bax, who operates Culture Works, a private English-as-a-second-language school with 20 employees and an SRI pension plan.
“I think people do this because it’s a lifestyle choice,” she added. “You won’t find socially responsible investors who don’t recycle, who don’t give money to charity or don’t volunteer.”
Brian O’Neill agrees. He’s the senior fund analyst at Morningstar Canada, a leading investment fund research firm that screens and tracks about 50 Canadian SRI funds.
“I think the two tend to come hand-in-hand ..... For most SRI funds, we’ll look at environmental screens as well. It’s very unusual for investors to want a social screen, but not an environmental screen,” he says.
“If the environment continues to be the most important issue for Canadians,” he added, “then we’ll see more [mutual fund] offerings out there and see more money flowing into them.”
Special to The Globe and Mail
Green Funds Still On Top
Socially responsible mutual funds that focus on green technology and sustainable practices are top performers this year-to-date.
SocialFunds.com -- While many of the technology companies that are a staple of social funds continue to experience a slump, dragging some funds into the red for the year, green technologies still carry the day. A look at the performance of social funds year-to-date, as of September 30, reveals the same trend in domestic equity funds, global funds, and balanced funds.
Among domestic equity funds, New Alternatives Fund is the clear top performer with a 74.00 percent gain for the year so far, more than double the next fund in line and putting it in the fourth percentile rank among its peers for the same period. New Alternatives, which invests specifically in industries oriented toward a clean environment, had a relatively lackluster performance until this year, bringing it's 5 year annualized return up to an admirable 17.07 percent.
"We invest in the environment because we think it's the right thing to do and because it also seems makes sense economically," said David Shoenwald, co-manager of New Alternatives, who founded the fund with his father in 1982. "Also, New Alternatives doesn't own the stocks most funds own, whether they're social funds or not, the Intels and Microsofts which are not doing as well as they did in past years."
Two other domestic equity funds are tied for second place in performance this year-to-date (9/30), Calvert Capital Accumulation Fund and Citizens Emerging Growth Fund, both of which have gained 23.66 percent. Calvert Capital Accumulation Fund, a moderately aggressive mid-cap fund, employs Calvert's comprehensive social screens and is managed by Brown Capital Management.
"This year, we have seen a movement toward a more diversified market and away from a speculative, technology driven market," said Tedd Alexander, Portfolio Manager and Analyst for Brown Capital Management. "Our investments away from technology in such areas as Healthcare and Financials have provided a large measure of the strong performance of Calvert Capital Accumulation Fund."
The highest performer among international social funds was Portfolio 21, the environmental sustainability fund introduced last year by the Portland, Oregon-based Progressive Investment Management. Portfolio 21 gained a 4.91 percent return year-to-date, the only positive return for the period among international or global social funds and a formidable success compared to their benchmark, the MSCI World Equity Index, which returned -7.25 percent over the same period.
"Portfolio 21's premise is that companies that incorporate environmental sustainability into their business strategies will have better than average prospects for long term success," said Leslie Christian, President of Progressive Investment Management. "This year, Portfolio 21 has benefited from its holdings in alternative energy, which are directly related to the environmental sustainability focus of the fund."
Topping off the ascendancy of green funds is the Green Century Balanced Fund, the highly proactive environmentally screened fund managed by the Boston-based Winslow Management Company for Green Century, a non-profit consortium of environmental groups. Green Century Balance Fund gained 43.46 percent year-to-date, more than five times any other social balanced fund, maintaining its first percentile ranking among its peer group for the same period.
"Green Century Balanced Fund invests in green, or environmentally pro-active, companies and clean, or environmentally responsible, companies, and avoids the 'dirties,'" said Jack Robinson, President of Winslow Management. "Our large commitment this year to renewable/alternative energy has been most rewarding and includes such holdings as Vestas Wind Power (Danish wind turbine manufacturer), AstroPower (solar cells), and Fuelcell Energy (fuel cells) to name three."
Finally, there are no strictly green products among fixed income funds, Parnassus California Tax-Exempt Fund is the top performer so far this year with 7.59 percent. Part of the Parnassus Income Trust, this fund for California residents only performed in the top second percentile among its peer group for the same period.
"In general, California bonds have done well because of scarcity," said Jerome Dodson, Parnassus President and portfolio manager for the fund. "Relatively few California municipalities are issuing bonds because they are flush with cash from increased tax revenue due to the booming economy. The Fund's top performance this year is due to low expenses, low turnover in the portfolio and selecting municipal bonds with strong social factors."
It is important to point out that the year is not over until it is over, and three quarters establish only a short-term trend in the scheme of things. Many of social funds that were top performers last year may surface again in the coming months, so far this year has shown that social funds investing in environmental solutions for tomorrow may reap their reward after all.
© 2008 SRI World Group, Inc. All Rights Reserved.
SocialFunds.com -- While many of the technology companies that are a staple of social funds continue to experience a slump, dragging some funds into the red for the year, green technologies still carry the day. A look at the performance of social funds year-to-date, as of September 30, reveals the same trend in domestic equity funds, global funds, and balanced funds.
Among domestic equity funds, New Alternatives Fund is the clear top performer with a 74.00 percent gain for the year so far, more than double the next fund in line and putting it in the fourth percentile rank among its peers for the same period. New Alternatives, which invests specifically in industries oriented toward a clean environment, had a relatively lackluster performance until this year, bringing it's 5 year annualized return up to an admirable 17.07 percent.
"We invest in the environment because we think it's the right thing to do and because it also seems makes sense economically," said David Shoenwald, co-manager of New Alternatives, who founded the fund with his father in 1982. "Also, New Alternatives doesn't own the stocks most funds own, whether they're social funds or not, the Intels and Microsofts which are not doing as well as they did in past years."
Two other domestic equity funds are tied for second place in performance this year-to-date (9/30), Calvert Capital Accumulation Fund and Citizens Emerging Growth Fund, both of which have gained 23.66 percent. Calvert Capital Accumulation Fund, a moderately aggressive mid-cap fund, employs Calvert's comprehensive social screens and is managed by Brown Capital Management.
"This year, we have seen a movement toward a more diversified market and away from a speculative, technology driven market," said Tedd Alexander, Portfolio Manager and Analyst for Brown Capital Management. "Our investments away from technology in such areas as Healthcare and Financials have provided a large measure of the strong performance of Calvert Capital Accumulation Fund."
The highest performer among international social funds was Portfolio 21, the environmental sustainability fund introduced last year by the Portland, Oregon-based Progressive Investment Management. Portfolio 21 gained a 4.91 percent return year-to-date, the only positive return for the period among international or global social funds and a formidable success compared to their benchmark, the MSCI World Equity Index, which returned -7.25 percent over the same period.
"Portfolio 21's premise is that companies that incorporate environmental sustainability into their business strategies will have better than average prospects for long term success," said Leslie Christian, President of Progressive Investment Management. "This year, Portfolio 21 has benefited from its holdings in alternative energy, which are directly related to the environmental sustainability focus of the fund."
Topping off the ascendancy of green funds is the Green Century Balanced Fund, the highly proactive environmentally screened fund managed by the Boston-based Winslow Management Company for Green Century, a non-profit consortium of environmental groups. Green Century Balance Fund gained 43.46 percent year-to-date, more than five times any other social balanced fund, maintaining its first percentile ranking among its peer group for the same period.
"Green Century Balanced Fund invests in green, or environmentally pro-active, companies and clean, or environmentally responsible, companies, and avoids the 'dirties,'" said Jack Robinson, President of Winslow Management. "Our large commitment this year to renewable/alternative energy has been most rewarding and includes such holdings as Vestas Wind Power (Danish wind turbine manufacturer), AstroPower (solar cells), and Fuelcell Energy (fuel cells) to name three."
Finally, there are no strictly green products among fixed income funds, Parnassus California Tax-Exempt Fund is the top performer so far this year with 7.59 percent. Part of the Parnassus Income Trust, this fund for California residents only performed in the top second percentile among its peer group for the same period.
"In general, California bonds have done well because of scarcity," said Jerome Dodson, Parnassus President and portfolio manager for the fund. "Relatively few California municipalities are issuing bonds because they are flush with cash from increased tax revenue due to the booming economy. The Fund's top performance this year is due to low expenses, low turnover in the portfolio and selecting municipal bonds with strong social factors."
It is important to point out that the year is not over until it is over, and three quarters establish only a short-term trend in the scheme of things. Many of social funds that were top performers last year may surface again in the coming months, so far this year has shown that social funds investing in environmental solutions for tomorrow may reap their reward after all.
© 2008 SRI World Group, Inc. All Rights Reserved.
12/22/2008
La pompe à chaleur, grande gagnante du pétrole cher, équipe toujours plus de villas
De plus en plus de pompes à chaleur sont installées dans les caves des villas individuelles ou dans les jardins (ici une pompe air-eau). Elles sont rentables par rapport aux citernes à mazout en deux à trois ans déjà.
Agrandir l'image
CONSTRUCTION. Pourtant plus cher à installer, le système de pompe tient désormais la vedette dans les bâtiments neufs.
Philippe Gumy - Le Temps
Mardi 23 décembre 2008
«L'engouement pour la pompe à chaleur ne se dément pas. Lorsque le prix du pétrole battait record sur record, au printemps dernier, j'étais submergé de coups de fil de propriétaires désireux de changer de mode de chauffage.» André Freymond, le responsable de l'antenne romande du Groupement promotionnel suisse pour les pompes à chaleur (GSP), n'a pratiquement pas besoin de faire de publicité pour séduire le chaland.
Rapidement rentable
L'équation est simple: si le prix du mazout est à 90 francs les 100 litres - le combustible coûtait plus cher de janvier à octobre cette année -, l'investissement supplémentaire qu'implique une pompe à chaleur peut être rentabilisé très rapidement. Même si ce type de chauffage nécessite de forer le sol, ce qui coûte dans les 60 francs le mètre (jusqu'à 150 mètres de profondeur), ou à compresser de l'air ambiant, il se révèle meilleur marché après deux ans déjà comparé à une chaudière fonctionnant au gasoil, et en sept ans par rapport à une chaudière à gaz.
Il n'est donc guère étonnant que 60 à 65% des nouvelles villas, en moyenne suisse, soient équipées de pompes et que cette proportion grimpe même à 80% dans les régions où il n'y a pas de réseau de gaz. Pour les immeubles neufs un quart environ des bâtisses sont dotées d'un tel système de chauffage.
Outre le coût avantageux, André Freymond met surtout en avant le caractère écologique du produit pour lequel il est lobbyiste. «Le bilan CO2 est extrêmement positif», note-t-il. En utilisant 1 kilowattheure (kWh) d'électricité pour faire fonctionner l'installation, cette dernière récupère gratuitement jusqu'à 3 ou 4 kWh naturellement présents dans l'environnement (le sol, l'air ou l'eau ou une combinaison de ces éléments).
A noter qu'en face, les promoteurs des énergies alternatives estiment assez unanimement que la pompe à chaleur ne doit pas être considérée comme un système «vert», car il utilise de l'électricité, dont la production nécessite notamment le recours au nucléaire. «C'est vrai, répond André Freymond, mais la consommation totale des 126000 pompes à chaleur aujourd'hui installées dans le pays représente seulement 1,5 à 1,6% de la consommation totale de courant.»
Schulthess en plein boom
Une chose est sûre: l'usager final plébiscite ce mode de chauffage. Les fabricants de pompes à chaleur le prouvent. Une petite dizaine d'industriels se partagent actuellement le marché helvétique, dont le groupe zurichois Walter Meier, l'allemand Watterkotte (qui produit notamment à Coutaman, dans le canton de Fribourg), ou encore un autre zurichois, Schulthess.
Plus connue pour ses machines à laver, cette firme dégage en fait désormais presque les deux tiers de ses ventes annuelles, attendues à 400 millions de francs cette année, dans le domaine des pompes à chaleur. La hausse des commandes pour ces dernières s'est en outre inscrite à 55% au premier semestre. Et la tendance se poursuit, assurait Schulthess début décembre. «D'ici à 2020, il devrait y avoir 300000 à 500000 pompes à chaleur installées en Suisse», abonde André Freymond. Le produit a donc toutes les chances d'être une vedette pendant de nombreuses années.
Agrandir l'image
CONSTRUCTION. Pourtant plus cher à installer, le système de pompe tient désormais la vedette dans les bâtiments neufs.
Philippe Gumy - Le Temps
Mardi 23 décembre 2008
«L'engouement pour la pompe à chaleur ne se dément pas. Lorsque le prix du pétrole battait record sur record, au printemps dernier, j'étais submergé de coups de fil de propriétaires désireux de changer de mode de chauffage.» André Freymond, le responsable de l'antenne romande du Groupement promotionnel suisse pour les pompes à chaleur (GSP), n'a pratiquement pas besoin de faire de publicité pour séduire le chaland.
Rapidement rentable
L'équation est simple: si le prix du mazout est à 90 francs les 100 litres - le combustible coûtait plus cher de janvier à octobre cette année -, l'investissement supplémentaire qu'implique une pompe à chaleur peut être rentabilisé très rapidement. Même si ce type de chauffage nécessite de forer le sol, ce qui coûte dans les 60 francs le mètre (jusqu'à 150 mètres de profondeur), ou à compresser de l'air ambiant, il se révèle meilleur marché après deux ans déjà comparé à une chaudière fonctionnant au gasoil, et en sept ans par rapport à une chaudière à gaz.
Il n'est donc guère étonnant que 60 à 65% des nouvelles villas, en moyenne suisse, soient équipées de pompes et que cette proportion grimpe même à 80% dans les régions où il n'y a pas de réseau de gaz. Pour les immeubles neufs un quart environ des bâtisses sont dotées d'un tel système de chauffage.
Outre le coût avantageux, André Freymond met surtout en avant le caractère écologique du produit pour lequel il est lobbyiste. «Le bilan CO2 est extrêmement positif», note-t-il. En utilisant 1 kilowattheure (kWh) d'électricité pour faire fonctionner l'installation, cette dernière récupère gratuitement jusqu'à 3 ou 4 kWh naturellement présents dans l'environnement (le sol, l'air ou l'eau ou une combinaison de ces éléments).
A noter qu'en face, les promoteurs des énergies alternatives estiment assez unanimement que la pompe à chaleur ne doit pas être considérée comme un système «vert», car il utilise de l'électricité, dont la production nécessite notamment le recours au nucléaire. «C'est vrai, répond André Freymond, mais la consommation totale des 126000 pompes à chaleur aujourd'hui installées dans le pays représente seulement 1,5 à 1,6% de la consommation totale de courant.»
Schulthess en plein boom
Une chose est sûre: l'usager final plébiscite ce mode de chauffage. Les fabricants de pompes à chaleur le prouvent. Une petite dizaine d'industriels se partagent actuellement le marché helvétique, dont le groupe zurichois Walter Meier, l'allemand Watterkotte (qui produit notamment à Coutaman, dans le canton de Fribourg), ou encore un autre zurichois, Schulthess.
Plus connue pour ses machines à laver, cette firme dégage en fait désormais presque les deux tiers de ses ventes annuelles, attendues à 400 millions de francs cette année, dans le domaine des pompes à chaleur. La hausse des commandes pour ces dernières s'est en outre inscrite à 55% au premier semestre. Et la tendance se poursuit, assurait Schulthess début décembre. «D'ici à 2020, il devrait y avoir 300000 à 500000 pompes à chaleur installées en Suisse», abonde André Freymond. Le produit a donc toutes les chances d'être une vedette pendant de nombreuses années.
3/02/2008
Speculators Driving the Ag Market? Not!
Written by Julian Murdoch
February 19, 2008 12:00 AM EST
Page 1 of 3
Pick a chart in the agricultural world (say, wheat) and it's obvious that something's going on. With wheat rising so fast they're resetting the circuit breakers, the conventional wisdom lays the blame on the growth of exchange-traded funds (ETFs) and other passive commodity indexes: Investors are buying long, and staying long, and that's skewing the market.
With this as background, consider the November proposal by the Commodity Futures Trading Commission (CFTC) on increasing the levels for speculative position limits in agricultural futures. The public comment period ended in late January, and sources have told us that comments seem to have been overwhelmingly negative. The proposed rule limit would increase single month and all-month speculative position limits (the number of contracts a "trader" can hold) for most agricultural commodities.
Who Cares?
On the surface, there's a valid reason for concern. Increasing the speculative position limits would theoretically leave the market open to increased risk of big firms coming in and cornering the market in say, wheat futures. Virtually everyone we talked to in the grain industry believes that speculative money has already played a large role in the all-time high prices that many grains, such as wheat and corn, have been experiencing in the past year. If true, then increasing the trading limits would let in more noncommercial money—possibly to the detriment of companies who use futures for their "legitimate" purpose, as a hedging tool to decrease business risk.
Grain processors use hedging as a way to spread out their risk—they purchase futures contracts in order to lock in prices for grain that they will need in the coming months. When investors play, they almost exclusively hold long-only positions, and thus bid up those contracts. Grain processors end up paying more than they (theoretically) would have if these financial players weren't in the market. After all, even though a futures contract is derivative of an underlying good, it is in and of itself a good subject to demand pressures. So in this time of rising spot prices, not only are the futures going up, but the whole curve is shifting up. Higher prices lead to higher margin requirements. The National Grain and Feed Association—an industry group made up of a wide range of grain industry participants from people dealing with physical storage and processing of grain to commodity brokers, banks and transportation companies—recently released a number of statements highlighting the possible problems associated with the proposed rule changes.
"Such traditional hedgers have seen a dramatic increase in recent months in the amount of money needed to finance margin requirements on outstanding futures contracts."
"In this environment, the marketplace is ill-equipped to efficiently absorb more investment capital and perform its core function of serving as an efficient tool for businesses hedging physical grain purchases, particularly when virtually all of that investment capital is long-only and a large share of open interest essentially is 'not for sale' for long periods of time."
"The lack of convergence between cash and futures markets during the delivery period, in conjunction with rapidly rising commodity values, has created huge borrowing needs and financial risks and exposure for the grain-buying industry," the NGFA said in a statement submitted to the CFTC. "As banks have begun to question hedging performance in futures positions, borrowing lines have been stretched to the limit or beyond…Cash basis levels [the difference between futures and cash market prices for a specific commodity] are widening to reflect much higher financing costs—to the extent financing is even available—that now are being forced into the system."
"Both the overall confidence in the [futures] market and the livelihood and business structure of the cash grain industry are at stake." Four different ways of saying "the sky is falling," which, if you're someone who has to buy grain for a living, it must indeed seem to be.
Four different ways of saying “the sky is falling,” which, if you’re someone who has to buy grain for a living, it must indeed seem to be.
What happens to a market when the people who physically store the commodity and need it for their business are unable to compete with the big bucks from Wall Street? These are not huge oil conglomerates that have become accustomed to an environment of rapid price changes driven by politics. The grain markets, while volatile, have historically been much more a traditional hedging market, and less a financial battleground. If you're on the buy side of wheat, it must seem like a whole new world out there.
On The Other Hand
But wait a minute. Pretty much everyone can see (even me, and I'm far from the smartest money in the game) that the grain market fundamentals are tight. Between the effects of biofuels on crop planting and usage, increased demand for feed grains to satisfy increased demand for beef and poultry, and adverse weather shocks elsewhere on global crops such as wheat, it is no wonder that we are seeing prices at all-time highs.
If this were really the result of all these ETFs buying into rising prices, we'd expect to see it in the exchange numbers, right? But check out the Commitment of Traders reports (COT) for the last year. This is the data that's supposed to tell us exactly this.
If it is indeed the influx of Wall Street money that is responsible for the rise in prices, you would expect to see an increase in holdings and/or the numbers of index traders participating in the market. It isn't there—at least not in these stats. The percentage of open interest these "index traders" have been holding has stayed roughly the same since the COT started splitting out the information in a supplemental report in January 2007.
Ok, so what's an index trader? Well, in a rare moment of clarity, CFTC calls them folks who "managed funds, pension funds, and other investors that are generally seeking exposure to a broad index of commodity prices as an asset class in an unleveraged and passively managed manner." They also toss in firms that engaged in derivative trading (swaps really) based on broad indexes, for whom a particular contract is just part of a big-picture strategy. You'd expect this to be the lair in which the bogeyman is living. Well …
… the truth is, bullpucky. The real growth—in numbers of participants—in the markets has been commercial traders. Commercial traders are the ones who are supposedly doing legitimate hedging. The number of "index traders" has remained the same in the past year.
In other words, the long, passive money has stayed pretty much the same no matter how you look at it, either as a percentage of the market, or as a number-of-players.
Of course, the CFTC doesn't give us juicy details. They don't specify who exactly those noncommercial traders are, and it could well be that some traders are being captured in the wrong category—which is what many in the industry think is happening. But until the stats are fixed, we won't know for sure. The rise in participation for commercial traders is logical—with prices and the market behaving as it has been, it is in the commercial traders' best interests to be part of the market. In fact, you'd expect the commercial traders to be the savviest folks in the virtual pits: After all, they've got the closest thing to inside information. They actually have to use the stuff. Higher prices lead to higher margin requirements. The National Grain and Feed Association—an industry group made up of a wide range of grain industry participants from people dealing with physical storage and processing of grain to commodity brokers, banks and transportation companies—recently released a number of statements highlighting the possible problems associated with the proposed rule changes.
"Such traditional hedgers have seen a dramatic increase in recent months in the amount of money needed to finance margin requirements on outstanding futures contracts."
"In this environment, the marketplace is ill-equipped to efficiently absorb more investment capital and perform its core function of serving as an efficient tool for businesses hedging physical grain purchases, particularly when virtually all of that investment capital is long-only and a large share of open interest essentially is 'not for sale' for long periods of time."
"The lack of convergence between cash and futures markets during the delivery period, in conjunction with rapidly rising commodity values, has created huge borrowing needs and financial risks and exposure for the grain-buying industry," the NGFA said in a statement submitted to the CFTC. "As banks have begun to question hedging performance in futures positions, borrowing lines have been stretched to the limit or beyond…Cash basis levels [the difference between futures and cash market prices for a specific commodity] are widening to reflect much higher financing costs—to the extent financing is even available—that now are being forced into the system."
"Both the overall confidence in the [futures] market and the livelihood and business structure of the cash grain industry are at stake." Four different ways of saying "the sky is falling," which, if you're someone who has to buy grain for a living, it must indeed seem to be.
Four different ways of saying “the sky is falling,” which, if you’re someone who has to buy grain for a living, it must indeed seem to be.
What happens to a market when the people who physically store the commodity and need it for their business are unable to compete with the big bucks from Wall Street? These are not huge oil conglomerates that have become accustomed to an environment of rapid price changes driven by politics. The grain markets, while volatile, have historically been much more a traditional hedging market, and less a financial battleground. If you're on the buy side of wheat, it must seem like a whole new world out there.
On The Other Hand
But wait a minute. Pretty much everyone can see (even me, and I'm far from the smartest money in the game) that the grain market fundamentals are tight. Between the effects of biofuels on crop planting and usage, increased demand for feed grains to satisfy increased demand for beef and poultry, and adverse weather shocks elsewhere on global crops such as wheat, it is no wonder that we are seeing prices at all-time highs.
If this were really the result of all these ETFs buying into rising prices, we'd expect to see it in the exchange numbers, right? But check out the Commitment of Traders reports (COT) for the last year. This is the data that's supposed to tell us exactly this.
If it is indeed the influx of Wall Street money that is responsible for the rise in prices, you would expect to see an increase in holdings and/or the numbers of index traders participating in the market. It isn't there—at least not in these stats. The percentage of open interest these "index traders" have been holding has stayed roughly the same since the COT started splitting out the information in a supplemental report in January 2007.
Ok, so what's an index trader? Well, in a rare moment of clarity, CFTC calls them folks who "managed funds, pension funds, and other investors that are generally seeking exposure to a broad index of commodity prices as an asset class in an unleveraged and passively managed manner." They also toss in firms that engaged in derivative trading (swaps really) based on broad indexes, for whom a particular contract is just part of a big-picture strategy. You'd expect this to be the lair in which the bogeyman is living. Well …
… the truth is, bullpucky. The real growth—in numbers of participants—in the markets has been commercial traders. Commercial traders are the ones who are supposedly doing legitimate hedging. The number of "index traders" has remained the same in the past year.
In other words, the long, passive money has stayed pretty much the same no matter how you look at it, either as a percentage of the market, or as a number-of-players.
Of course, the CFTC doesn't give us juicy details. They don't specify who exactly those noncommercial traders are, and it could well be that some traders are being captured in the wrong category—which is what many in the industry think is happening. But until the stats are fixed, we won't know for sure. The rise in participation for commercial traders is logical—with prices and the market behaving as it has been, it is in the commercial traders' best interests to be part of the market. In fact, you'd expect the commercial traders to be the savviest folks in the virtual pits: After all, they've got the closest thing to inside information. They actually have to use the stuff.
February 19, 2008 12:00 AM EST
Page 1 of 3
Pick a chart in the agricultural world (say, wheat) and it's obvious that something's going on. With wheat rising so fast they're resetting the circuit breakers, the conventional wisdom lays the blame on the growth of exchange-traded funds (ETFs) and other passive commodity indexes: Investors are buying long, and staying long, and that's skewing the market.
With this as background, consider the November proposal by the Commodity Futures Trading Commission (CFTC) on increasing the levels for speculative position limits in agricultural futures. The public comment period ended in late January, and sources have told us that comments seem to have been overwhelmingly negative. The proposed rule limit would increase single month and all-month speculative position limits (the number of contracts a "trader" can hold) for most agricultural commodities.
Who Cares?
On the surface, there's a valid reason for concern. Increasing the speculative position limits would theoretically leave the market open to increased risk of big firms coming in and cornering the market in say, wheat futures. Virtually everyone we talked to in the grain industry believes that speculative money has already played a large role in the all-time high prices that many grains, such as wheat and corn, have been experiencing in the past year. If true, then increasing the trading limits would let in more noncommercial money—possibly to the detriment of companies who use futures for their "legitimate" purpose, as a hedging tool to decrease business risk.
Grain processors use hedging as a way to spread out their risk—they purchase futures contracts in order to lock in prices for grain that they will need in the coming months. When investors play, they almost exclusively hold long-only positions, and thus bid up those contracts. Grain processors end up paying more than they (theoretically) would have if these financial players weren't in the market. After all, even though a futures contract is derivative of an underlying good, it is in and of itself a good subject to demand pressures. So in this time of rising spot prices, not only are the futures going up, but the whole curve is shifting up. Higher prices lead to higher margin requirements. The National Grain and Feed Association—an industry group made up of a wide range of grain industry participants from people dealing with physical storage and processing of grain to commodity brokers, banks and transportation companies—recently released a number of statements highlighting the possible problems associated with the proposed rule changes.
"Such traditional hedgers have seen a dramatic increase in recent months in the amount of money needed to finance margin requirements on outstanding futures contracts."
"In this environment, the marketplace is ill-equipped to efficiently absorb more investment capital and perform its core function of serving as an efficient tool for businesses hedging physical grain purchases, particularly when virtually all of that investment capital is long-only and a large share of open interest essentially is 'not for sale' for long periods of time."
"The lack of convergence between cash and futures markets during the delivery period, in conjunction with rapidly rising commodity values, has created huge borrowing needs and financial risks and exposure for the grain-buying industry," the NGFA said in a statement submitted to the CFTC. "As banks have begun to question hedging performance in futures positions, borrowing lines have been stretched to the limit or beyond…Cash basis levels [the difference between futures and cash market prices for a specific commodity] are widening to reflect much higher financing costs—to the extent financing is even available—that now are being forced into the system."
"Both the overall confidence in the [futures] market and the livelihood and business structure of the cash grain industry are at stake." Four different ways of saying "the sky is falling," which, if you're someone who has to buy grain for a living, it must indeed seem to be.
Four different ways of saying “the sky is falling,” which, if you’re someone who has to buy grain for a living, it must indeed seem to be.
What happens to a market when the people who physically store the commodity and need it for their business are unable to compete with the big bucks from Wall Street? These are not huge oil conglomerates that have become accustomed to an environment of rapid price changes driven by politics. The grain markets, while volatile, have historically been much more a traditional hedging market, and less a financial battleground. If you're on the buy side of wheat, it must seem like a whole new world out there.
On The Other Hand
But wait a minute. Pretty much everyone can see (even me, and I'm far from the smartest money in the game) that the grain market fundamentals are tight. Between the effects of biofuels on crop planting and usage, increased demand for feed grains to satisfy increased demand for beef and poultry, and adverse weather shocks elsewhere on global crops such as wheat, it is no wonder that we are seeing prices at all-time highs.
If this were really the result of all these ETFs buying into rising prices, we'd expect to see it in the exchange numbers, right? But check out the Commitment of Traders reports (COT) for the last year. This is the data that's supposed to tell us exactly this.
If it is indeed the influx of Wall Street money that is responsible for the rise in prices, you would expect to see an increase in holdings and/or the numbers of index traders participating in the market. It isn't there—at least not in these stats. The percentage of open interest these "index traders" have been holding has stayed roughly the same since the COT started splitting out the information in a supplemental report in January 2007.
Ok, so what's an index trader? Well, in a rare moment of clarity, CFTC calls them folks who "managed funds, pension funds, and other investors that are generally seeking exposure to a broad index of commodity prices as an asset class in an unleveraged and passively managed manner." They also toss in firms that engaged in derivative trading (swaps really) based on broad indexes, for whom a particular contract is just part of a big-picture strategy. You'd expect this to be the lair in which the bogeyman is living. Well …
… the truth is, bullpucky. The real growth—in numbers of participants—in the markets has been commercial traders. Commercial traders are the ones who are supposedly doing legitimate hedging. The number of "index traders" has remained the same in the past year.
In other words, the long, passive money has stayed pretty much the same no matter how you look at it, either as a percentage of the market, or as a number-of-players.
Of course, the CFTC doesn't give us juicy details. They don't specify who exactly those noncommercial traders are, and it could well be that some traders are being captured in the wrong category—which is what many in the industry think is happening. But until the stats are fixed, we won't know for sure. The rise in participation for commercial traders is logical—with prices and the market behaving as it has been, it is in the commercial traders' best interests to be part of the market. In fact, you'd expect the commercial traders to be the savviest folks in the virtual pits: After all, they've got the closest thing to inside information. They actually have to use the stuff. Higher prices lead to higher margin requirements. The National Grain and Feed Association—an industry group made up of a wide range of grain industry participants from people dealing with physical storage and processing of grain to commodity brokers, banks and transportation companies—recently released a number of statements highlighting the possible problems associated with the proposed rule changes.
"Such traditional hedgers have seen a dramatic increase in recent months in the amount of money needed to finance margin requirements on outstanding futures contracts."
"In this environment, the marketplace is ill-equipped to efficiently absorb more investment capital and perform its core function of serving as an efficient tool for businesses hedging physical grain purchases, particularly when virtually all of that investment capital is long-only and a large share of open interest essentially is 'not for sale' for long periods of time."
"The lack of convergence between cash and futures markets during the delivery period, in conjunction with rapidly rising commodity values, has created huge borrowing needs and financial risks and exposure for the grain-buying industry," the NGFA said in a statement submitted to the CFTC. "As banks have begun to question hedging performance in futures positions, borrowing lines have been stretched to the limit or beyond…Cash basis levels [the difference between futures and cash market prices for a specific commodity] are widening to reflect much higher financing costs—to the extent financing is even available—that now are being forced into the system."
"Both the overall confidence in the [futures] market and the livelihood and business structure of the cash grain industry are at stake." Four different ways of saying "the sky is falling," which, if you're someone who has to buy grain for a living, it must indeed seem to be.
Four different ways of saying “the sky is falling,” which, if you’re someone who has to buy grain for a living, it must indeed seem to be.
What happens to a market when the people who physically store the commodity and need it for their business are unable to compete with the big bucks from Wall Street? These are not huge oil conglomerates that have become accustomed to an environment of rapid price changes driven by politics. The grain markets, while volatile, have historically been much more a traditional hedging market, and less a financial battleground. If you're on the buy side of wheat, it must seem like a whole new world out there.
On The Other Hand
But wait a minute. Pretty much everyone can see (even me, and I'm far from the smartest money in the game) that the grain market fundamentals are tight. Between the effects of biofuels on crop planting and usage, increased demand for feed grains to satisfy increased demand for beef and poultry, and adverse weather shocks elsewhere on global crops such as wheat, it is no wonder that we are seeing prices at all-time highs.
If this were really the result of all these ETFs buying into rising prices, we'd expect to see it in the exchange numbers, right? But check out the Commitment of Traders reports (COT) for the last year. This is the data that's supposed to tell us exactly this.
If it is indeed the influx of Wall Street money that is responsible for the rise in prices, you would expect to see an increase in holdings and/or the numbers of index traders participating in the market. It isn't there—at least not in these stats. The percentage of open interest these "index traders" have been holding has stayed roughly the same since the COT started splitting out the information in a supplemental report in January 2007.
Ok, so what's an index trader? Well, in a rare moment of clarity, CFTC calls them folks who "managed funds, pension funds, and other investors that are generally seeking exposure to a broad index of commodity prices as an asset class in an unleveraged and passively managed manner." They also toss in firms that engaged in derivative trading (swaps really) based on broad indexes, for whom a particular contract is just part of a big-picture strategy. You'd expect this to be the lair in which the bogeyman is living. Well …
… the truth is, bullpucky. The real growth—in numbers of participants—in the markets has been commercial traders. Commercial traders are the ones who are supposedly doing legitimate hedging. The number of "index traders" has remained the same in the past year.
In other words, the long, passive money has stayed pretty much the same no matter how you look at it, either as a percentage of the market, or as a number-of-players.
Of course, the CFTC doesn't give us juicy details. They don't specify who exactly those noncommercial traders are, and it could well be that some traders are being captured in the wrong category—which is what many in the industry think is happening. But until the stats are fixed, we won't know for sure. The rise in participation for commercial traders is logical—with prices and the market behaving as it has been, it is in the commercial traders' best interests to be part of the market. In fact, you'd expect the commercial traders to be the savviest folks in the virtual pits: After all, they've got the closest thing to inside information. They actually have to use the stuff.
Covering Carbon Credit Projects Via Political Risk Insurance
Author: Steve McKay
Date: 2008-02-21
Zurich yesterday announced it is providing political risk insurance (PRI) for carbon credit projects. This is the first time Zurich has offered coverage for these types of “green” projects in emerging markets, reflecting the Group’s recently launched global climate initiative focusing on the myriad of risks associated with climate change.
Zurich yesterday announced it is providing political risk insurance (PRI) for carbon credit projects. This is the first time Zurich has offered coverage for these types of “green” projects in emerging markets, reflecting the Group’s recently launched global climate initiative focusing on the myriad of risks associated with climate change.
Under the Kyoto protocol – an international treaty created to reduce greenhouse gas (GHG) emissions linked to global warming – certain types of projects are eligible for carbon credits based on the level of greenhouse gases reduced.
The carbon credit market – currently estimated to be USD 60 billion – has doubled during the last two years. The protocol provides the means to monetize the environmental benefits of reducing GHGs and sell the emissions credits. Zurich’s policy helps to protect against risk of host government actions that might prevent an investor from receiving benefits associated with emission credits generated.
“Our involvement with carbon credit projects highlights the role of political risk coverage in helping make these projects more attractive to investors who are concerned about political risk and market volatility,” said Daniel Riordan, executive vice president and managing director for Zurich’s emerging markets unit. “As financial incentives for carbon projects become more common in the advent of emissions trading, we anticipate seeing more investments in emerging markets.”
Zurich is a market leader providing political risk and trade credit insurance on a global basis. More than 300 of the world’s leading companies – including financial institutions, multinational corporations, investors, exporters and infrastructure developers – are supported from Zurich offices in Washington D.C., Barcelona, Frankfurt, Hong Kong, London, Paris, Sydney and Tokyo. All policies are backed by the financial strength of Zurich Financial Services Group with ratings of AA- from Standard & Poor’s.
Zurich is a member of the Berne Union (BU) – an international union of credit and investment insurers – and often coinsures and reinsures with fellow BU members that are export credit agencies and multilateral institutions.
Zurich’s recently launched climate initiative has a three-pillar approach. First, Zurich has established an internal Climate Office that is charged with driving an understanding of climate-related risks across its businesses and is fully embedded in Zurich’s underwriting infrastructure. Second, Zurich has established a Climate Change Advisory Council that will directly report to Zurich’s Group Management on strategic and operational issues associated with climate change. Third, as part of the climate initiative Zurich launched an applied research program with organizations and institutions to examine the critical economic, finance and policy issues associated with climate change.
The main objective of Zurich’s market-focused global climate change initiative is to understand the emerging weather, financial and regulatory risks associated with climate change and to develop products and services that allow customers to cope with these risks.
Source: RiskCenter.com
Date: 2008-02-21
Zurich yesterday announced it is providing political risk insurance (PRI) for carbon credit projects. This is the first time Zurich has offered coverage for these types of “green” projects in emerging markets, reflecting the Group’s recently launched global climate initiative focusing on the myriad of risks associated with climate change.
Zurich yesterday announced it is providing political risk insurance (PRI) for carbon credit projects. This is the first time Zurich has offered coverage for these types of “green” projects in emerging markets, reflecting the Group’s recently launched global climate initiative focusing on the myriad of risks associated with climate change.
Under the Kyoto protocol – an international treaty created to reduce greenhouse gas (GHG) emissions linked to global warming – certain types of projects are eligible for carbon credits based on the level of greenhouse gases reduced.
The carbon credit market – currently estimated to be USD 60 billion – has doubled during the last two years. The protocol provides the means to monetize the environmental benefits of reducing GHGs and sell the emissions credits. Zurich’s policy helps to protect against risk of host government actions that might prevent an investor from receiving benefits associated with emission credits generated.
“Our involvement with carbon credit projects highlights the role of political risk coverage in helping make these projects more attractive to investors who are concerned about political risk and market volatility,” said Daniel Riordan, executive vice president and managing director for Zurich’s emerging markets unit. “As financial incentives for carbon projects become more common in the advent of emissions trading, we anticipate seeing more investments in emerging markets.”
Zurich is a market leader providing political risk and trade credit insurance on a global basis. More than 300 of the world’s leading companies – including financial institutions, multinational corporations, investors, exporters and infrastructure developers – are supported from Zurich offices in Washington D.C., Barcelona, Frankfurt, Hong Kong, London, Paris, Sydney and Tokyo. All policies are backed by the financial strength of Zurich Financial Services Group with ratings of AA- from Standard & Poor’s.
Zurich is a member of the Berne Union (BU) – an international union of credit and investment insurers – and often coinsures and reinsures with fellow BU members that are export credit agencies and multilateral institutions.
Zurich’s recently launched climate initiative has a three-pillar approach. First, Zurich has established an internal Climate Office that is charged with driving an understanding of climate-related risks across its businesses and is fully embedded in Zurich’s underwriting infrastructure. Second, Zurich has established a Climate Change Advisory Council that will directly report to Zurich’s Group Management on strategic and operational issues associated with climate change. Third, as part of the climate initiative Zurich launched an applied research program with organizations and institutions to examine the critical economic, finance and policy issues associated with climate change.
The main objective of Zurich’s market-focused global climate change initiative is to understand the emerging weather, financial and regulatory risks associated with climate change and to develop products and services that allow customers to cope with these risks.
Source: RiskCenter.com
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