S&P Dow Jones Indices on Monday launched an index to track EU carbon allowance prices, it said in a press release.

The S&P GSCI Carbon Emission Allowances (EUA) EUR index is based on ICE Futures Europe’s EUA futures contract and marks an expansion of its series of single-commodity indices based on the wider S&P GSCI index.

“Broadening the financial instruments available to traders and investors in the global carbon market is an important goal of the S&P GSCI Carbon Emission Allowances (EUA) EUR,” said Fiona Boal, head of commodities and real assets at S&P Dow Jones Indices.

“Investors utilise this market to express a specific view on the price of carbon, to hedge risks or offset more carbon-heavy investments in their portfolios or combine carbon emissions with other assets to create energy-transition or low-carbon strategies while promoting the transition to a lower carbon economy.”

The launch follows similar carbon market index products introduced by information provider IHS Markit last September and by Barclays and several other investment firms since the late 2000s.

It also comes days after London-based environmental asset management firm Carbon Cap Management launched its own World Carbon Fund, which focuses on CO2 emissions trading schemes and other related markets including renewable energy certificates and low-carbon fuel standards.

By Mike Szabo – mike@carbon-pulse.com