German DWS issues retail carbon fund with Aquila

FRANKFURT, Sept 23 Tue Sep 23, 2008 11:38am EDT

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FRANKFURT, Sept 23 (Reuters) - DWS, the mutual fund unit of Deutsche Bank AG (DBKGn.DE), on Tuesday unveiled a fund for private investors in carbon dioxide (CO2) emission rights and related products.

The fund is managed by investment firm Acquila Capital of Hamburg, which will use the research and market expertise of First Climate, a carbon asset management firm and consultant to international organisations, based near Frankfurt.

"The CO2 market is in an early development phase. As an investment house and pioneer for alternative investments, we know that opportunities and possible uncertainties can be very high. This makes professional management all the more important," said Dieter Rentsch, managing partner at Aquila, in a statement.

A spokeswoman for Aquila said the fund would invest directly in European emissions allowances (EUAs), where it was taking a long position.

Tradable EUAs are issued to industry covered by Europe's CO2 mandatory emissions trading scheme.

In addition, the fund will also bet on spread opportunities between EUAs and certified emission reductions (CERs), which polluters that must comply with the scheme can buy from CO2 savings made more cheaply overseas, she said.

The fund will also seek to exploit spread opportunities between EUAs and Emission Reduction Units (ERUs), which are mainly generated in eastern European countries.

It will also pursue opportunity trades between CO2 and other fuels, and seek to bet on possible falls in the CO2 price up to 2020, if carbon capture and storage (CCS) technologies materialise and provide polluters with opportunities for CO2 savings.

Fund certificates have been available since Monday.

There was no specific target volume but it was estimated that the fund could attract investments of 250 million euros ($369 million), the Aquila spokeswoman said.

(Reporting by Vera Eckert; editing by Christopher Johnson)

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