The carbon market is growing at exponential rates. New legislation has passed all around the world and countries are shifting to stricter carbon laws. As a result, carbon funds have been having a fantastic year.
Who is at the forefront of this boom?
One such fund is the KraneShares Global Carbon ETF. Trading under the ticker KRBN, the ETF is up over 74% in the last year as well as having $540 million dollars in assets. The majority of KRBN’s portfolio consist of EU carbon futures, which have boomed over 60% over the past year.
Another growing fund is the iShares MSCI ACWI Low Carbon Target ETF which has increased over 32% in price over the last year.
Why is the carbon market soaring?
The interest in carbon credits is soaring as the market booms. Climate change is becoming increasingly alarming as countries fight to keep global temperatures under 1.5 degrees Celsius above levels today. Carbon taxes and tariffs are being introduced in the EU and China. Carbon credits have never been in such demand as restrictions become increasingly strict.
Another factor behind carbon’s big boom is the long-term outlook of reducing carbon emissions. The job against climate change is not done and will not be finished until countries become carbon neutral in 30-40 years. Investors are seeing a long-term investment. One in which governments are making it their priority to invest into.