Climate change continues to be a prime focus in Europe, which had its second-warmest winter on record, according to scientists.
“Between December and February, the average temperature was 1.4 degrees Celsius above the 1991-2020 average,” a Euronews.green article mentioned. “The unseasonable heat made 2021-2022 Europe’s joint-second warmest winter ever recorded, surpassed only by the winter of 2019-2020.”
This could provide an even greater emphasis on ensuring that climate change is a prime focus as Europe moves towards its goal of reducing carbon emissions. That, in turn, could increase the pace of carbon credits that allow companies to continue operations while transitioning to energy sources that reduce emissions.
The sale of carbon credits in Europe in particular opens opportunities for investment in exchange traded funds (ETFs) that focus specifically on this niche market. ETF provider KraneShares has a suite of ETFs that focus on specifically that.
2 ETFs for Carbon Credit Exposure
For investors targeting the European carbon credit market specifically, consider the KraneShares European Carbon Allowance Strategy ETF (KEUA). The fund provides targeted exposure to the European Union Allowances (EUA) cap-and-trade carbon allowance program.
KEUA is benchmarked to the IHS Markit Carbon EUA Index, which tracks the most-traded EUA futures contracts. As a part of the KraneShares suite of carbon ETFs, KEUA provides a new vehicle for participating in the price of carbon and hedging risk while supporting responsible investing and ESG goals.
Investors not looking for a region-specific option can look at the KraneShares Global Carbon Strategy ETF (KRBN). The fund offers a more broad-based option, but still offers exposure to the European 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). This offers the investors broader exposure than KEUA.
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