IndustryCarbon ETF raked in big bucks
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Market analysis： The price of carbon rights soared by 135% a year, second only to wood! Carbon ETF raked in big bucks!
Intensified climate change has set off a global environmental protection trend. The price of carbon credits in Europe has surged, making it one of the best-performing raw material investments in the past year.
The Wall Street Journal reported that European carbon credits quotations have soared by 135% in the past 12 months, and have recently continued to set record highs. Only wood is the better-performing raw material target.
In addition to stricter environmental protection regulations, Europe’s cold winter and low liquefied natural gas (LNG) inventories have forced people to burn coal with high carbon emissions, which is also one of the reasons for the soaring of carbon credits.
According to the Environmental Information Center, carbon rights are also called carbon credits, which originated from the 1997 Kyoto Protocol. Every country has a certain amount of carbon rights. Countries that emit excessive carbon dioxide need to purchase carbon rights from other countries. The money will be used for forest conservation to compensate for the pollution caused by carbon dioxide emissions.
This attracts capital into emerging carbon investment funds. The report pointed out that the KraneShares global carbon ETF issued in July 2020 has attracted nearly US$400 million so far, most of which have been inflows this year.
Jonathan Shelon, Chief Operating Officer of KraneShares, said that the demand from retail investors and professional investors has steadily increased. When environmental protection regulations are tightening and companies are facing pressure to reduce carbon emissions, the above-mentioned ETF can be one of the ways to make profits.
According to data from Intercontinental Exchange (ICE), between 2017 and 2020, participants in the European and North American carbon market have grown by 85%. ICE statistics show that the open interest of European carbon rights futures contracts hit $105 billion on May 25, a record high.
ICE European carbon rights futures ended at 50.29 euros per ton, slightly lower than the recent record high of 56.65 euros. Even so, Trevor Sikorski, head of energy conversion research at the consulting firm Energy Aspects, said that traders still bet that carbon rights futures will be quoted at 100 euros per ton.
The quotation shows that KRBN fell 2.01% and closed at $33.60; the year-to-date increase has reached 36.42%.