Suprisingly, after losing 52% of its value from inception until the end of 2009, the iPath carbon GRN is leading all sustainable ETFs and mutual funds this year with a robust 1.4% YTD return.
Airshares launched during this debacle and was unable to attract sufficient investment to stick around and stopped trading in August 2009. GRN’s performance is even more surprising given the generally downbeat news for cap and trade in the US driven, in my opinion, in large part due to the down economy, controversy over climate science, and downward pressure on fuel prices. Even California’s governor, a staunch supporter of cap and trade, is now talking about slowing down the state’s implementation of AB32.
But an even bigger hurdle for cap and trade (other than the horrendous complexity of these programs) is expanded supplies of reasonably priced natural gas. A little bit of substitution of coal by gas in electric generation and gasoline by gas in transportation may yield enough carbon mitigation to moot the cap and trade argument. With this kind of regulatory overhang, investing in carbon trading looks risky.
Disclosure: No positions