The KraneShares California Carbon Allowance Strategy ETF (KCCA) has seen tremendous flows as of late, bringing its AUM up to over $200 million. The fund launched in October of last year.
For investors looking to make responsible, climate-friendly investment decisions, KCCA offers exposure to the California Carbon Allowances (CCA) cap-and-trade carbon allowance program. California CCA’s are essentially tradable carbon emissions permits instituted by the state government. The CCA program began in 2012 and covers approximately 80% of the state’s greenhouse gas emissions. It expanded to cover Quebec in 2014, to reduce carbon levels to 60% of their 1990 levels by 2030 and achieve carbon neutrality by 2045.
One of the things that make KCCA especially compelling is that the minimum floor price for allowances is increased annually as the number of allowances being sold decreases, meaning California has been successful in creating a system that nudges carbon prices up as time passes. This makes KCCA an excellent long-term play, as demand for these allowances is not likely to diminish even as supply becomes more limited.
Source: California Air Resources Board
KCCA also recently won the Newcomer ESG/Impact ETF of the Year at the 2022 Mutual Fund and ETF awards. “After winning both ETF Suite of the Year for our China suite and Best Newcomer Active ETF for the KraneShares Global Carbon Strategy ETF (NYSE: KRBN) in 2021, we’re pleased to keep our winning streak going with KCCA this year,” said Luke Oliver, managing director and head of Climate Investments at KraneShares. “Both our clients and the judges recognized that carbon allowances can be a source of low-correlated growth potential, which can also have a positive impact on the planet.”
Given a bleak-looking equity and bond market landscape, KCCA offers pure-play exposure to rising carbon credit prices in California and Québec.
The expense ratio is .79%.
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