China remains the world leader in climate investment and renewable energy. While it does emit the highest levels of carbon dioxide each year, China continues to aggressively transition to renewable energies. Given the long runway left in converting to renewable energies, investing in China’s green initiatives is worth consideration.
In 2022, China invested $546 billion in clean energy, almost half of all global spending on climate initiatives, reported BloombergNEF. As a country, China is committed to the carbon transition. It remains caught in many of the dilemmas of an emerging country economy, however, with many emissions tied to exports. All in all, there is a long runway left in China’s carbon transition, a runway where KraneShares sees strong potential.
KraneShares recently founded the U.S.-China Green Institute, a nonprofit that spans both China and the U.S. and focuses on green initiatives and climate change.
“We were over here on behalf of the Institute,” explained Jonathan Krane, CEO of KraneShares, in a recent video. “its mission is to have the U.S. and China partner around green initiatives and solutions for the climate problem.”
Krane and David Adelman, general counsel for KraneShares and former U.S. ambassador to Singapore, alongside Terry Branstad, former U.S. ambassador to China, visited Mainland China for the first time since the onset of the pandemic. They joined Xiabing Su, cultural analyst for KraneShares, in China.
Adelman explained a primary goal for visiting China was to further establish this connection and the goals of the Institute.
“This is an area where the U.S. and China clearly must work together,” Adelman explained. It’s “in the interest of the whole world for the United States and China to cooperate on green initiatives.”
Investing in China’s Green Initiatives With KGRN
China is currently the world leader in total renewable energy capacity, holding 43% of global capacity, and the KraneShares MSCI China Clean Technology Index ETF (KGRN) capitalizes on investing in clean technology in China’s growing economy. China plans to have renewable energy make up 35% of its electricity needs by 2030 and is well on the way to that goal.
KGRN tracks the MSCI China IMI Environment 10/40 Index. The fund is based on five clean technology themes: alternative energy, energy efficiency, green building, sustainable water, and pollution prevention
It allows investors direct exposure to ESG market movers in China such as EV carmaker Li Auto (10.29% weight), as well as global battery giant Contemporary Amperex (8.27%) and solar companies such as Xinyi Solar Holdings (9.96%). All holdings are as of 06/23/2023.
KGRN has an expense ratio of 0.78%.
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