Carbon ETFs top ESG thematic ETFs in January

SparkChange Physical Carbon EUA ETC (CO2), WisdomTree Carbon (CARP), and KraneShares European Carbon Allowance ETF (KEUA) rose by close to double-digit percentages in January as European Union Allowance (EUA) futures (Mar'22) inched +10.8% higher over the same period to reach €88.89/tonne of CO2.  

The price of polluting across Europe is getting more expensive as power generators continue to feed off coal instead of pricy natural gas. Despite the dip from its all-time high reach in December 2021, European natural gas today remains four times more expensive than it was last year. European tension with Russia has disrupted the supply of Gas, pushing prices higher in midst of rising demand on colder weather.

Carbon ETFs remain an attractive commodity for investors this year, luring in over $112 million of net inflows. KraneShares Global Carbon Strategy ETF (KRBN) has been the most popular in January, capturing over half of the inflows. The fund is benchmarked to IHS Markit’s Global Carbon Index, which offers broad coverage of cap-and-trade carbon allowances including major European and North American cap-and-trade programs: European Union Allowances (EUA), California Carbon Allowances (CCA), and the Regional Greenhouse Gas Initiative (RGGI).

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