Swiss-based investment bank UBS has teamed up with Diapason Commodities Management to launch the first biofuel index giving investors access to various commodity futures.
The global index, which will be published in US dollars, euros, Swiss francs and Japanese yen, will cover a range of commodities which are used in the production of biofuels ethanol and biodiesel. The bank believes that increasing energy concerns such as global warming and supply security will drive businesses and societies toward alternative fuels.
Bioethanol is an alcohol-based fuel made from the fermentation of crops such as sugar beet or wheat. It can be mixed in petrol to reduce emissions. Biodiesel is produced from vegetable oil and can be used in diesel engines. Production of these two major forms of alternative fuel is increasing rapidly as more countries attempt to cut carbon emissions and find alternative forms of energy.
UBS said in a statement: This innovative index adds a new dimension to the liquid commodities indices and can serve as a suitable basis for a variety of structured financial products. Its launch means that investors will, for the very first time, have access to an efficient and liquid investment instrument that gives them exposure to the market performance of alternative fuels.