UBS has launched the UBS World Emissions Index, the first index for global markets of emissions allowances.

The index will cover several European emissions trading platforms, all of which are part of the European Emissions Trading Scheme. Additional trading systems will be considered for potential future inclusion in the index. The index will be published in US dollars, euros and Swiss francs.

The index has been created as an international benchmark of tradable derivative instruments referencing emissions allowances. “This index adds a new dimension to the world of commodity indices by creating the first ever index covering emissions globally and can serve as a suitable basis for structured financial products,” UBS says. “Its launch means that investors will, for the very first time, have access to an investment instrument that gives them exposure to the global markets of emissions allowances as they evolve.”

At the start, the index is composed as an open basket of futures contracts on EU ETS carbon dioxide (CO2), weighted between two European trading platforms – the European Climate Exchange and the Nordic Power Exchange. The weights are allocated based upon the liquidity of the underlying emissions trading platforms, currently the European Climate Exchange is weighted 72.11%, compared with 27.89% for the Nordic Power Exchange.

UBS says it believes that the global emissions markets have gained prominence over the last couple of years and are set to grow, both in volume and scope.

The European Emissions Trading Scheme, a scheme for carbon dioxide (CO2) emissions reduction, was implemented in January 2005. In 2008, this scheme could potentially be broadened to include all six greenhouse gases covered by the Kyoto Protocol.