Market Overview

Move Along, Nothing To Be Seen With Carbon ETN


Perhaps you didn't know there's an ETN that's a play on global carbon credits. You're not alone. The iPath Global Carbon ETN (NYSE: GRN) trades less than 1,000 shares a day and has less than $3.6 million in assets under management.

Those aren't the knocks on GRN though. Light-volume ETNs can be great trades, just look at the comparable iPath ETNs tracking coffee and cotton. The problem is the state of the carbon credit market itself. Basically, the global carbon credit market is a result of the Kyoto Treaty 14 years ago.

Fair enough, but as Bloomberg News points out, the plan "is breaking down as the U.S. and China grapple over how, when and to what extent they can reduce pollution."

To be fair, there is a real market for global carbon credits. Bloomberg data show that market had $128 billion in trading volume last year. Then again, that's a far cry from any number of commodities and is easily dwarfed by the oil market by more than 10x.

Here are the facts: The number of carbon traders is dwindling because it's just too tough to make money in this business. IntercontinentalExchange (NYSE: ICE) shuttered its carbon platform in January and the International Emissions Trading Association says its membership has declined about 16% since the international divisions emerged at the 2009 annual climate summit held in Copenhagen, Bloomberg reported.

All of this makes GRN a tough trade to embrace. Not to mention that GRN seems to be best left to adrenaline junkies. The ETN moved in a range of more than $5 on Monday on just over 3,000 shares. As of this writing on Tuesday, the ETN has a range of a penny on 1,100 shares. Take a pass.

Posted-In: Long Ideas News Short Ideas Specialty ETFs Intraday Update Trading Ideas ETFs


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