Emissions Are Up, but There’s Some Good News | ETF Trends

Greenhouse gas emissions rose slightly in the U.S. in 2022, going up by 1.3% from the year prior, according to a report from Rhodium Group.

While the data is only preliminary, this uptick in emissions shows that the U.S. remains behind its target of reducing GHG emissions from 50% to 52% below 2005 levels by 2030 set by the Paris Agreement. Last year, emissions reached only 15.5% below 2005 levels. To meet the 2025 target of 26% to 28% below 2005 levels and get back on track for the 2030 Paris goal, the U.S. needs to significantly increase its efforts.

Fortunately, there are some bright spots. For one thing, despite last year’s rise in emissions, GDP growth outpaced the increase in GHG emissions in 2022, as opposed to 2021. Plus, the passage of the Inflation Reduction Act (IRA) is a significant turning point, and we may start to see its effects on emissions as early as this year if the government can fast-track implementation, with progress expected to accelerate by 2025.

Investors can also help achieve this goal by targeting investments centered around decarbonization. Decarbonization efforts have led to global impact investing becoming a $1 trillion market, but getting to net zero by 2050 will require tremendous, rapid change and large-scale technology deployment across multiple industries.

“As world governments map a pathway for net zero emissions over the next few years, decarbonization has become a key issue in areas like transportation, commodities mining, and even crypto as companies look for cleaner, renewable forms of energy to support their operations,” said VettaFi associate director of research Roxanna Islam.

One option investors can consider is the actively managed Neuberger Berman Carbon Transition & Infrastructure ETF (NYSE Arca: NBCT), which seeks to invest in companies that are focused on or are transitioning their businesses to focus on one or more of the following themes:

  1. Low-carbon resources: issuers focused on producing renewable energy, such as solar, wind, geothermal, and green hydrogen, and the related storage and transport of these energies.
  2. Electrification: issuers that help enable the replacement of technologies that use higher carbon-emitting fuels with those that use low-carbon resources as a source of energy, including those that support smart grid and electric vehicle charging solutions, as well as electricity transmission and distribution that helps expand usage of low-carbon solutions.
  3. Carbon reduction solutions: issuers that directly facilitate the carbon reduction goals of infrastructure owners, including innovative raw materials, industrial gases, engineering and construction service providers, environmental services providers, and environmental technology providers.

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