New CO2 trading
The brains coming up with new investment products are running in high gear. So with all the talk about global warming and Co2 the logical thing is to launch products that lets you get into this new market.

Quote from the sales propaganda: “The world climate conference spurred the demand for investments specifically directed at environmental markets, and specifically Carbon related products. The agreement in Copenhagen to control carbon emissions make carbon emission allowances more valuable and investors might want to be long from the current low levels.”

How to trade CO2
For example brokerages that allow you to buy CFD, (Contract For Difference), may have CFDs for carbon dioxide emission. There are also likely that there will be ETF that track carbon dioxide emission prices, but it seems that there are none at the time of writing.

Example trade using the Saxo Bank CFD
Saxo Bank offer clients to trade down to a minimum of 25 emission allowances. Each allowance being the equivalent of 1 metric tonne of carbon dioxide emission.

You buy 25 metric tonnes of EMISSIONSDEC10 at a price of EUR 14.75. If market rises to 15.75 you stand to make EUR 25. The contract value of EUR 368.75 being price times amount would require a margin of EUR 36.88.

Criticism of Emission trading
If you buy the Co2 emission contract you are making a bet that the price of a ton of carbon dioxide emission will go up in time.

This is a market that is controlled by the government. You need to predict if the government are able to enforce this new carbon dioxide tax on companies and people around the world, and if companies and people are able to pay them at all. From an investing perspective it is probably best to see it as a dynamic and flexible tax on companies. The top price of carbon dioxide emissions will be where the breaking point of the buyers are. If companies just think it is better to shut down it will be less demand for carbon credits. And I suppose that is the whole argument of the global warming agenda - that it is better if industry is turned off or curbed.

That said a lot of other markets are also to a large part controlled by the government and central banks, such as the gold price, interest levels on currencies and money supply. Also in the case of OPEC manipulating the oil price.

But the biggest problem with Co2 emission credits are that they are built on a deception that Co2 is bad and causes environmental problems on earth. That is a false idea, but people in power can force it on to the people anyway as a tax. Everything can be taxed and a tax does not need to make sense. If people wake up and demand that Co2 credits are abolished then your Co2 emission bets are worth nothing.

Also people are talking about “carbon emission”, which is a completly different thing than carbon dioxide. Carbon is the basic element, and carbon dioxide is a molecule with one carbon atom and two oxygen atoms. Let’s at least get the terms right…