Ponder KCCA as California Dials Up Climate Change Strategy

California continues to ratchet up its climate control strategy to cut greenhouse gas emissions. The California Air Resources Board (CARB) will reveal a revamped version of its climate plan that includes even more stringent requirements.

“The California Air Resources Board today (November 16) unveiled a new version of its highly-anticipated strategy for battling climate change, setting more ambitious targets for cutting greenhouse gases and scaling up controversial projects that capture carbon,” Cal Matters noted in a blog post.

A mid-December CARB meeting will determine whether the state will adopt the stricter plan, building upon the state’s already-stringent emissions requirements. If adopted, it could be a template for other states to follow as the country continues to address climate change.

“If adopted by the air board at its Dec. 15 meeting, the plan would radically reshape California’s economy, alter how Californians’ vehicles, buildings and appliances are powered, and ultimately serve as a blueprint for other states and countries to follow,” the blog added further.

“Failure is not an option,” said Air Board Chair Liane Randolph. “There is too much at stake and we need to move as fast and as far as we can to lessen the worst impacts of climate change and leave future generations a livable and healthy California.”

Capitalize on a California’s Push for Carbon Reduction

With California aggressively pushing to reduce its carbon output, investors will want to look at state-specific opportunities that can capitalize on this initiative. One such opportunity to consider is the KraneShares California Carbon Allowance ETF (KCCA), which provides targeted exposure to the California Carbon Allowances (CCA) cap-and-trade carbon allowance program.

KCCA is benchmarked to the IHS Markit Carbon CCA Index, which tracks the frequently traded CCA futures contracts. The fund is a part of the KraneShares suite of carbon ETFs and provides exposure to an investment vehicle that capitalizes on the price of carbon and hedges risk while supporting goals aligned with environmental, social, and governance (ESG) initiatives.

The index measures a portfolio of futures contracts on carbon credits issued by the CCA and only includes futures with a maturity in December in the next year or two while using a wholly owned subsidiary in the Cayman Islands to prevent investors from needing a K-1 for tax purposes. Furthermore, CCA provides investors with portfolio diversification with exposure to assets that don’t typically correlate to the broader stock market.

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