UBS AG and Diapason Commodities Management are planning to launch the first commodity-based index for biological fuels.
The UBS Diapason Global Biofuel Index (UBS-D GBFI) will cover a range of commodities used in the production of ethanol and biodiesel, and will be published in USD, EUR, CHF and JPY.
Rising CO2 emissions caused by increasing volumes of road traffic, the associated global warming effects and the dependency of national economies on oil are prompting politicians, business and society to revise their thinking, with growing emphasis being placed on alternative fuels as a result. Production of the two major forms of alternative fuel, ethanol and biodiesel, is increasing rapidly. In addition, more and more countries are promoting the use of alternative fuels. UBS and Diapason believe that alternative fuels will not eclipse the importance of oil in the near future, but will at least help to meet the growing worldwide demand for energy as well as reduce CO2 emissions.
The UBS Diapason Global Biofuel Index, which is composed of various commodity futures, is weighted to reflect the importance of each individual commodity used in the production of ethanol and biodiesel as well as the liquidity of the underlying futures.
The idea is to add a new dimension to the liquid commodities indices and 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.
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