Like stocks, investors can buy and sell Exchange-Traded Funds (ETFs) whenever the market is open. Often investing in carbon credits through ETFs offers a simple and diverse way to enter this expanding market.
We’ve covered some of the top ETFs for 2025 in the carbon credit market and how they are supporting sustainable investments.
1. iShares Global Clean Energy ETF (ICLN): Ethical Investing with Sustainability
The iShares Global Clean Energy ETF (ICLN) is a part of BlackRock and a top-performing ETF. It focuses on renewable energy companies like solar, wind, and other sustainable technologies. It’s a great option for investors wanting to capitalize on clean energy stocks worldwide.
Essentially, this fund tracks an index of stocks in the global clean energy sector. One important attribute of this ETF is its strict sustainability rules. It excludes companies involved in weapons, tobacco, coal, oil sands, and Arctic drilling. These exclusions ensure the fund supports ethical and sustainable investing.
ICLN currently manages assets worth $5-6 billion. By 2025, its value could reach $8-10 billion.
source: NASDAQ
Top Holdings Portfolio
Among its top holdings are First Solar Inc., a major solar panel manufacturer; Iberdrola SA, Enphase Energy Inc., Vestas Wind Systems, and Ørsted. These companies contribute significantly to ICLN’s diversified and growth-oriented portfolio.
- ALSO SEE: Top 5 Carbon Stocks to Watch in 2025
2. Invesco Solar ETF (TAN): A Focus on Solar Energy Growth
The Invesco Solar ETF, known as TAN, manages assets valued between $3–4 billion and has a projected valuation of $6–8 billion by 2025.
This fund focuses on solar energy companies, such as manufacturers, installers, and technology providers. As a result, TAN is an excellent option for those looking to invest in solar power.
Index Alignment and Key Holdings
TAN is based on the MAC Global Solar Energy Index. It invests 90% of its assets in securities, American depositary receipts (ADRs), and global depositary receipts (GDRs) listed in the index.
The index includes solar energy companies and adjusts returns for taxes on non-resident investors. Both the fund and index are rebalanced quarterly to stay aligned with market changes.
Its top holdings include Enphase Energy, First Solar, Sunrun, Nextracker, Class A, GCL Technology Holdings Ltd., and Encavis AG.
source: NASDAQ
3. First Trust Global Wind Energy ETF (FAN): A Wind Energy Investment
The First Trust Global Wind Energy ETF, known as FAN, currently manages assets worth $2–3 billion, with an expected valuation of $5–7 billion by 2025.
Notably, this ETF is for the wind energy sector. It’s prospective for those managing wind farms, producing wind power, or making wind energy equipment. However, companies must have a market cap of at least $100 million, a daily trading volume of $500,000, and a free float of 25% to join the index.
FAN benefits from the global growth of wind power and strong government support for renewables. Its focused strategy and diverse portfolio make it attractive for wind energy investors. However, like any investment, returns are not guaranteed.
Comprehensive and Diversified Portfolio
FAN has a global portfolio of 52 wind energy companies worldwide. It includes “Pure Play” firms with 50% or more revenue from wind energy and “Diversified” firms partially in the sector. The index gives 60% weight to Pure Play and 40% to Diversified companies. Top holdings include Orsted, Vestas, EDP Renováveis, Northland Power, Siemens Energy, and GE Vernova.
source: NASDAQ
4. SPDR S&P Kensho Clean Power ETF (CNRG): A Clean Energy Investment
The SPDR S&P Kensho Clean Power ETF (CNRG) currently has assets worth $1–2 billion, with a projected value of $4–6 billion by 2025. It is managed by State Street’s Investment Solutions Group and is built for long-term growth.
With its focus on innovation and the clean energy sector, this ETF is a great option for those wanting to invest in the future of renewable energy.
CNRG tracks the S&P Kensho Clean Power Index, which uses AI to find companies leading in clean energy. The index includes firms in solar, wind, geothermal, and hydroelectric power. It also covers energy storage and other emerging technologies. This way it offers a diverse portfolio of companies advancing low-emission power solutions.
Key Holdings and Diversified Portfolios
CNRG’s portfolio includes innovative companies like Eos Energy Enterprises, Shoals Technologies Group, Plug Power, and Array Technologies. It also features Constellation Energy, Nextracker, GE Vernova, and Bloom Energy. These holdings highlight the fund’s focus on emerging technologies and their potential in the growing renewable energy market.
source: NASDAQ
5. Global X Lithium & Battery Tech ETF (LIT): Powering the Future
The Global X Lithium & Battery Tech ETF (LIT) gives investors access to the booming electrification, lithium, and battery technology sector. Their assets have a $4–5 billion valuation and are projected to reach $8–10 billion by 2025. The ongoing global demand for lithium and supply constraints make this ETF a promising investment in this sector.
Additionally, LIT tracks the Solactive Global Lithium Index, which follows top companies in lithium exploration, mining, and battery production. Although no financial instruments track lithium prices directly, the ETF offers indirect exposure by investing in key firms in the lithium supply chain.
Top Holdings Portfolio
LIT’s portfolio includes top companies in lithium and battery technology like Albemarle Corp, Tesla Inc, and Ganfeng Lithium. Other key holdings are Panasonic Holdings, CATL, and Tianqi Lithium.
source: NASDAQ
Quick Check: 5 Reasons to Choose ETFs over Individual Stocks
Often, ETFs are a better option than buying individual stocks, providing more stability and less risk. Find out why…
- ETFs combine various assets, helping spread out risks and reduce volatility in the carbon market.
- They offer more stability compared to individual stocks, providing a balanced way to invest.
- ETFs reduce risk by pooling multiple investments, offering a smoother experience for investors.
- They usually have lower costs and fees than managing individual stocks. This saves investors money.
- ETFs simplify investing in the carbon credit market, allowing exposure without requiring deep expertise.