Carbon Emissions Trading: What it Means for Individual Investors

Abstract

This study examines the investment opportunities available for individual investors in the carbon emissions market. Volume, investment correlations, location of trade, return volatility, and price discovery are examined for the Barclays carbon emissions exchange traded note (ETN) launched in July of 2008 and traded in U.S. markets. Our main findings indicate this new type of asset evidences diversification benefits for individual investors. Its main source of volatility and price discovery is the underlying European futures carbon market.

Citation

Martinez, V. (2014), "Carbon Emissions Trading: What it Means for Individual Investors", International Financial Markets (Frontiers of Economics and Globalization, Vol. 13), Emerald Group Publishing Limited, Leeds, pp. 165-178. https://doi.org/10.1108/S1574-8715(2013)0000013014