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KraneShares Carbon Suite

Invest in ETFs offering broad coverage of cap-and-trade carbon allowances around the world.

Investing in renewable energy is an excellent way to take climate action, but it's only one piece of a complicated puzzle. For example, many industries rely on fossil fuels, and switching to renewable options isn't always feasible. As a result, some governments have adopted carbon credit schemes to control and eventually curb emissions.

The KraneShares Carbon Suite ETFs offer broad coverage of cap-and-trade carbon allowances by tracking the most traded carbon credit futures contracts. By investing in the fund, investors can increase the cost of carbon allowances to discourage emissions while benefiting from one of the world's fastest-growing commodities.

Let's take a closer look at the publicly-traded ETF and why you may want to invest in it to make an impact on climate change.

Why Carbon Credits?


Carbon credit schemes enable the free market to incorporate the environmental cost of carbon emissions into their conventional accounting. As a result, economists believe that an appropriately-priced carbon credit will force the free market to adjust to provide the best mix of products and services – accounting for environmental impact.

Businesses that invest in emission reduction technology can sell their excess carbon credits to companies that exceed their emissions limits, who may also need to buy additional carbon allowances to cover their footprint. As a result, higher carbon credit prices encourage emissions reductions and make it more costly to pollute.

Currently, carbon credit schemes cover about 20% of total greenhouse gas emissions, while nearly 40% of global GDP comes from places with a carbon price. At the same time, the top four emissions trading systems saw a 66% and 165% increase in trading volume in 2020 and 2021, respectively, pointing to growing adoption rates.

KraneShares Carbon Suite


KraneShares offers several carbon credit-focused ETFs to provide broad or targeted exposure. With China launching its carbon allowance market in 2021, these funds could expand in the future to include exposure to the most significant future market, covering 3.3 billion tons of CO2. However, for now, the advisor offers four different funds.

The firm's funds include:

  • The KraneShares Global Carbon Strategy ETF (KRBN) offers broad cap-and-trade carbon allowances by tracking the most traded carbon credit futures contracts.
  • The KraneSahres European Carbon Allowance Strategy ETF (KEUA) offers targeted exposure to the European Union Allowances cap-and-trade carbon allowance program.
  • The KraneShares California Carbon Allowance Strategy ETF (KCCA) provides targeted exposure to the California Carbon Allowances cap-and-trade carbon allowance program.
  • The KraneShares Global Carbon Offset Strategy ETF (KSET) provides broad coverage of the voluntary carbon market by tracking carbon offset futures contracts.

The Bottom Line


The KraneShares Carbon Suite ETFs make it easy for anyone to invest in carbon credits, encourage carbon reduction efforts, and discourage emissions. At the same time, carbon credits have been among the top-performing commodities in the world. As a result, investors may have an opportunity to make a difference and a profit.

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Apr 19, 2024

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Asset Class

Equity

Impact Focus

Renewable Energy

Tags

carbon credits etfs

Highlights

  • Carbon credits have become one of the top-performing commodities worldwide.
  • Carbon credit prices need to reach $147 to reach current climate goals.