Washington state’s carbon market cleared a notable hurdle in November, receiving significant support from voters for its continuation. The KraneShares Global Carbon Strategy ETF (KRBN ) now invests in Washington’s regulated carbon allowance market, the only fund to do so.
Carbon allowance markets are programs with government regulatory oversight and policy supports. These programs seek to reduce emissions while also bolstering the transition to a net-zero economy. They work by allotting a certain number of carbon allowances for mandatory participants. One allowance equates to one metric ton of greenhouse gases.
Over time, the cap of allowed allowances shrinks, driving up the cost to pollute. At the same time, the funding raised goes back into various state programs and initiatives that further bolster the energy transition and supports residents.
November’s Washington ballot included a referendum to retract the Climate Commitment Act.. Passed in 2021, it created the state’s cap-and-trade program with emissions reduction targets of 45% by 2030 compared to 1990 levels. By 2040, targets seek a 70% reduction of emissions, and 95% by 2050.
The referendum to repeal failed in a 62% to 38% vote. With this major legislative hurdle out of the way, the future of Washington’s carbon market appears promising.
Dynamically Invest in the Global Carbon Market With KRBN
The KraneShares Global Carbon Strategy ETF (KRBN ) was the first of its kind to offer an investment take on carbon credits trading. The fund tracks the S&P Global Carbon Credit Index, which follows the world’s most liquid carbon credit futures contracts. The strategy works to include new and expanding carbon markets globally, such as Washington’s market.
“The development of Washington’s cap-and-trade market underscores the importance of regional markets in the sustainable-energy transition,” Luke Oliver, Head of Climate Investments at KraneShares, explained in a press release.. “As the adoption of cap-and-trade systems expands, we believe exposure to these markets is becoming an essential consideration within investors’ portfolios.”
KRBN includes contracts from the European Union Allowances and California Carbon Allowances. It also includes the RGGI markets and the United Kingdom Allowances. KRBN also now invests in the Washington cap-and-trade program, with a 5% allocation.
KRBN carries a management fee of 0.85%.
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