HomeCarbon CreditsKraneShares Announce 2 new Carbon ETF's - KEUA & KCCA

KraneShares Announce 2 new Carbon ETF’s – KEUA & KCCA

Based on investor interest in KRBN (KraneShares Global Carbon ETF), the firm has launched two additional carbon allowances-focused ETFs.

“Through the phenomenal success of KRBN, we learned that many of our clients also want targeted exposure to the underlying markets,” said Luke Oliver, managing director and head of strategy at KraneShares.

“KEUA and KCCA provide access to the component carbon allowance markets at various stages of their growth cycle. With these new ETFs, investors can take a customizable precision-approach to invest in carbon markets.”

The KraneShares European Carbon Allowance ETF (KEUA) and the KraneShares California Carbon Allowance ETF (KCCA) are the new funds.

KEUA – Provides exposure to the European Union Allowances cap-and-trade carbon allowance program solely, and is actively managed with a 0.79% expense ratio.

The benchmark for the fund is the IHS Markit Carbon EUA Index, which follows the most-traded EUA futures contracts in the market, which is the oldest and most liquid for carbon allowances.

The market presently covers around 40% of all EU emissions, covering 27 member states as well as Norway, Iceland, and Liechtenstein. In an effort to reach long-term carbon emission targets, the yearly cap reduction was recently boosted from 2.2% to 4.2%.

KCCA– Provides exposure to the California Carbon Allowances cap-and-trade carbon allowance scheme solely, and is actively managed with a 0.79% expense ratio.

The fund’s benchmark is the HIS Markit Carbon CCA Index, which measures the most actively traded CCA futures contracts in a market that covers around 80% of California’s greenhouse gas emissions and has also covered Quebec’s emissions since its expansion in 2014.

The cap is now set to drop by 4% each year in order to achieve future carbon emission targets, and it has a built-in floor price that increases by 5% per year, plus an inflation adjustment.

 

Both funds may invest in carbon credit futures with different maturity dates than the index, or they may weight futures differently than the index. The fund may trade in CTFC-regulated futures and swaps beyond the CFTC 4.5 limit and is thus classified as a “commodity pool.”

Many countries and regions have implemented carbon-cap-and-trade programs, which limit how much carbon an individual firm can produce before needing to acquire allowances to offset extra emissions.

KraneShares presently invests in markets that have cap-and-trade schemes tied to emissions limits imposed by the Paris Agreement.

By establishing such programs, investors and markets can collaborate to put pressure on corporations to reduce emissions when exceeding the emissions limit becomes increasingly expensive.

Both funds join the increasing array of carbon allowance-focused ETFs, which includes the KRBN, which presently invests in the EU and North American markets, whereas the two new funds will each target a single market.

Most Popular
LATEST CARBON NEWS

Tesla Signs A Landmark Multi-Billion Dollar 15 GWh Megapack Deal

While Tesla's energy storage segment is smaller than its automotive business, it has been experiencing significant growth. This segment has rapidly accelerated and expanded...

Nickel Market in Turmoil: BHP to Halt Operations Due to Price Plunge

In recent developments within the global nickel market, the trajectory of prices has undergone a significant downturn. Consequently, nickel prices have plummeted from the highs...

HSBC Opens New Unit For Low-Carbon Finance, Alongside $1 Trillion Pledge

Global financial services group HSBC is launching a new business unit, HSBC Infrastructure Finance (HIF), to focus on infrastructure financing and project finance advisory...

Sungrow and Algihaz Join Forces for 7.8 GW Energy Storage in Saudi Arabia

Sungrow Power Supply, a Chinese photovoltaic inverter manufacturing giant recently announced to partner with Saudi Arabia’s Algihaz Holding for a massive energy storage project....
CARBON INVESTOR EDUCATION

The Ultimate Guide to Understanding Carbon Credits

Everything you need to know about carbon credits, voluntary and compulsory carbon markets, and carbon investment...

Top 4 Carbon Stocks To Watch In 2024

Carbon stocks, credits and capture technology are getting a lot of interest from investors. Companies will attract even more capital in 2023.

What Is COP28? Key Issues to Watch Out at 2023 Climate Summit

After a record-breaking year of devastating effects of climate change, from record wildfires in Greece and Canada to floods in Libya, the United Nations...

Climate Disclosure: New Corporate Standards for a Net Zero World

As part of the world’s continued efforts to combat climate change and transition towards net zero, one important piece of the puzzle is new...