Global X Launches ETF Targeting Carbon Futures

Global X ETFs has listed the Global X Carbon Credits Strategy ETF (NYSE Arca: NTRL) on the New York Stock Exchange. NTRL targets carbon futures across different geographies, with the aim of capping emissions in line with the 2015 Paris Agreement.

NTRL seeks to provide investment results that correspond generally to the price and performance, before fees and expenses, of the ICE Global Carbon Futures Index. The fund provides exposure to multiple emissions trading schemes globally by investing in the most actively traded carbon credit futures.

Specifically, NTRL takes long positions in futures that require “physical delivery” of emission allowances issued under “cap and trade” regimes. This includes futures administered in the European Union, U.K., and the U.S.

See more: “Global X Converts 2 Active Emerging Markets Mutual Funds to ETFs

The Rise of Compliance Carbon Markets

Climate change is one of the biggest challenges facing our planet today. The increasing concentration of greenhouse gases in the atmosphere is causing elevated temperatures, more frequent extreme weather events, and rising sea levels.

As a result, a variety of tools and technologies designed to fight climate change have emerged. One of those emerging tools is carbon credits. Carbon credits incentivize companies to reduce their carbon footprints through a market-based approach.

“As climate change persists, we’ve seen the emergence of new technologies and policies designed to curb global warming,” said Yili Wu, a research analyst at Global X, in a video introducing the fund. “One of these tools is the compliance climate carbon markets, which are expected to expand globally and see expanded trading volume and price.”

Since 2018, the size of the compliance carbon markets has more than quadrupled, to $856 billion from $186 billion. As the pressure to meet net-zero targets increases, Global X expects the compliance carbon markets to grow.

Recently, Global X has been expanding its lineup of ETFs. Earlier this month, the firm completed the conversion of two mutual funds into two actively managed emerging markets ETFs: the Global X Emerging Markets Great Consumer ETF (EMC) and the Global X Emerging Markets ETF (EMM). In April, the issuer launched the Global X PropTech ETF (PTEC).

NTRL has an expense ratio of 0.39%.

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