Last month SparkChange launched the world’s first physically-backed EU Carbon Allowances (EUAs) exchange-traded product (ETP).
Since then it has grown to over $100M in Assets Under Management (AUM).
Investors have expressed their support behind its primary selling point: the physical replication of carbon credits.
Their product tracks the price of EU Carbon Allowances (EUAs), which offer investors the opportunity to purchase carbon credit offsets from the European Commission.
Because these EUAs are physically withheld, this stops industrial firms from buying them to pollute, which creates a positive environmental impact and puts mounting pressure on the emitters to look for greener solutions.
Since EUAs are withheld, companies are required to pay an additional cost for operations that are not eco-friendly (making pollution more expensive).
In the first month, the ETC’s launch more than 1 million carbon offset credits were withheld. During that time the price of EUAs increased by over €20 per ton.
The carbon credit industry has grown exponentially over the past year. Some experts project it to be valued at $100 billion by 2030 (up from just $300 million in 2018). The difference with these credits, however, is that they are futures-based.
Advanced technology, increased regulation, and the use of carbon offsets can all help in the fight against climate change. It will be interesting to see how SparkChange’s program inspires companies and investments moving forward.
