Nascent Blockchain Sector Could Provide Growth for Carbon Credit Market

The carbon credit market could add an extra growth component with another nascent market: blockchain technology. As blockchain use becomes more prevalent, the carbon credit market could also stand to benefit.

Most often associated as the underlying technology that underpins cryptocurrencies, blockchain is also being used to disrupt the traditional financial system. From accounting to the facilitation of transactions, blockchain is already permeating other sectors and could eventually make its way into the carbon credit market.

“Right now, climate change has become one of the most critical issues the world is facing. It affects everybody living on this planet and could have serious lasting consequences for all of humanity if not addressed,” a Carbon Credits article said. “That’s why carbon credits have been on the radar in all sectors – not just the obvious ones like energy, agriculture, and forestry. And one of those industries is blockchain technology.”

Given the growth potential, there’s been a rise in carbon crypto companies, the article said. The benefits of blockchain technology could also serve well in the carbon credit market, opening up potential investment opportunities along the way.

“The strengths of blockchain technology, such as its transparency, secure record-keeping, and decentralization are advantages for carbon credits,” the article added. “That’s why many carbon crypto companies are already in the works. There’s a massive opportunity here for two of the biggest current investment trends to develop their synergies.”

Get All-Inclusive Exposure to the Carbon Credit Market

The latest developments in the carbon credit market add a growth factor for any portfolio that needs diversification. As such, consider the KraneShares Global Carbon Strategy ETF (KRBN), which offers a broad-based option to the global carbon credit market.

KRBN is benchmarked to IHS Markit’s Global Carbon Index, which offers broad coverage of cap-and-trade carbon allowances by tracking the most-traded carbon credit futures contracts. The index introduces a new measure for hedging risk and going long on the price of carbon while supporting responsible investing.

Currently, the index covers the major European and North American cap-and-trade programs: European Union Allowances (EUA), California Carbon Allowances (CCA), the Regional Greenhouse Gas Initiative (RGGI), and United Kingdom Allowances (UKA). KRBN comes with a 0.78% expense ratio.

For more news, information, and strategy, visit the Climate Insights Channel.