Investor ‘insight’: energy/enviro market
Jinfo Blog

2nd June 2010

By Joanna Ptolomey

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In case you have been living on the moon or hibernating recently then you already know about the debacle that is the BP oil spillage and gusher in the Gulf of Mexico - also known as the Deepwater Horizon oil spill. An event that has not only caused a loss of life, but also no doubt a real humdinger of an environmental and economic impact disaster for the Gulf of Mexico region – or perhaps even further. If you follow the blogs then you will have noticed the calls for ‘crowdsourcing solutions’ not just for the environmental and financial disaster, but also for the ensuing public relations disaster for BP. Not sure that BP want to ‘crowd source solutions’ at the moment, and even if the gusher is plugged or siphoned or whatever; this is another reminder of the high risk industry that is the energy and environmental markets. With these types of catastrophic events and the nature of this market investors are jittery. Coupled with the on-going concern that the public have about global warming and rising energy consumption growth, investors are ever more careful to seek opportunities to make money from these trends based on great information and analysis. Point Carbon (www.pointcarbon.com/) is one such company that provides this kind of data and has been recently be purchased by Thomson Reuters (http://thomsonreuters.com/) for an undisclosed sum. Could this be a trend in the market with rivals Bloomberg buying New Energy Finance (http://www.newenergyfinance.com/) which is a similar company and product to Point Carbon)? Point Carbon describe their service as an ‘in-depth knowledge of power, gas and CO2 emissions market’ providing key market intelligence to these markets. With their staff expertise they report on international and regional climate policy, mathematical and economic modelling, forecasting methodologies, risk management and market reporting. One of the more popular ways to trade in the energy sector these days, and also to give a nod (or salve your conscience) to the environment is through the carbon markets, where investors buy and sell ‘carbon credits. This is a method of ‘reducing or off setting’ green house gases. One carbon credit is equal to one ton of carbon dioxide, or in some markets, carbon dioxide equivalent gases. The mechanism for trading in carbon credits was formalized as part of the Kyoto protocol. Managing emissions is one of the fastest growing sectors in finance. In the Financial Times (FT) this morning it was announced that Barclays Bank, the largest provider of liquidity to the EU emissions trading market according to the FT, has bought Swedish carbon trader Tricorona for £98m in cash (http://digbig.com/5bbrmh). Intelligence for the energy and environment sectors is high risk high gain. I am sure that we will be hearing more about news aggregators and market intelligence bods ‘cozying up’ together in the near future.

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