The carbon catch!

IIPM PUBLICATION

The same thundering trend is seen in the rate of investment in agri-commodities; and clearly because corn and other products are being used to produce alternative fuel sources to meet tomorrow’s energy needs. If one browses recent history, one would find that there has been a significant surge in the prices of corn. One reason why the corn fields of Mexico are the geopolitical battle grounds for our diplomats is that ethanol, made out of corn, is seen to be the next crude oil for the future.

But then, going by the basic principles of investing for every dollar of return, is there any underlying risk in these eco-investments? Michael Lewis, Global Head, Commodities Research, Deutsche Bank Research, warns B&E, “Carbon credits do hold some risks, not least given the political framework of this market, as well as some of the project risk related to sourcing Certified Emission Reductions.” But what about seemingly sureshot top assets, like uranium? Lewis avers, “In the case of uranium, in reality the growth of nuclear power is not widely accepted. Countries like Germany are actually phasing out nuclear power.”

But still, the fact remains that despite the ubiquitous risks, investments in eco-asset classes do have their own share of Al-Gorean moolah hidden at the end of the rainbow. That’s the convenient truth, Mr. Gore. We guess you should be hyping up that too!

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative