In a decarbonizing world, there is great alpha potential in the companies that are driving the energy transition and are positioned to be leaders within their industries in a low-carbon future, such as worldwide aluminum giant Norsk Hydro.
Norsk Hydro (Hydro), headquartered in Norway, is one of the world’s largest aluminum companies as well as one of the top three energy providers in Norway and a main provider of power in Brazil and the Baltics.
Hydro’s transition to renewable energy crosses all aspects of its business, from investing in hydrogen and batteries to developing wind and solar projects to power its plants, as well as developing and delivering the world’s first near-zero aluminum for use in Europe and working to create net-zero aluminum.
“We would like to be in the forefront of industries that matter for a more sustainable future,” according to Hydro’s CEO Hilde Merethe Aasheim.
Demand for aluminum, a primary metal used in electrification, is expected to grow 70-80% by 2050 according to the International Aluminum Institute. Hydro is looking to meet growing demand while aligning with net-zero goals by 2050 by ramping up its recycling of post-consumer scraps in a net-zero process, employing carbon capture technologies on its smelter, and developing proprietary HalZero breakthrough technology for smelters that will only produce oxygen for emissions.
Hydro delivered its first near-zero aluminum made from 100% post-consumer aluminum with a footprint of less than 0.5kg carbon dioxide per kg of aluminum, the first company to do so globally, and remains on the cutting edge of emissions reduction within the aluminum industry.
“We are proud to partner with forward-leaning customers to lower their carbon footprint. This landmark project in Augsburg, Germany is part of Hydro’s contribution to decarbonize the biggest industries in the world using low-carbon, recycled aluminum,” said Eivind Kallevik, Executive Vice President of Hydro Aluminium Metal, in the press release.
Investing in Companies Driving the Energy Transition
The KraneShares Global Carbon Transformation ETF (KGHG ) focuses on the global industry leaders like Norsk Hydro, which is carried at a 3.96% weighting within the fund, that are pushing the global transition to net-zero emissions. KraneShares believes that the upside potential of investing in these companies as they transition is enormous.
The fund seeks to capture the true potential within the carbon transition by focusing on companies from within industries that are traditionally some of the highest emission offenders but that are on the precipice of transitioning to renewable technologies. These companies that are set to disrupt their industries would benefit greatly from being leaders in the transition, as the cost of carbon emissions will only become more expensive, cutting into the bottom line as demand decreases for high emissions offenders.
KGHG is an actively managed fund that invests globally across market caps and sectors in carbon emissions reducers that are taking active steps to reduce their carbon footprints and services or the carbon footprints of other companies. This also includes companies within the supply chain of the carbon-reducing companies and companies that are growing their businesses with companies that are materially reducing carbon emissions.
The fund utilizes proprietary, fundamental, bottom-up analysis using information disclosed by companies and third-party data.
KGHG carries an expense ratio of 0.89%.
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