Canada has finally received its first ETF related to the carbon credit space. Horizons ETF Managers this morning announced the launch of the Horizons Carbon Credits ETF (TSX: CARB), which will trade on the Toronto Stock Exchange.
The exchange traded fund aims to provide investors with exposure to carbon credits via the fund owning carbon credit futures. The fund operates by following the Horizons Carbon Credits Rolling Futures Index, which is focused on investments in cap and trade carbon allowances.
More specifically, the index follows the daily returns of European Union Allowance emission futures contracts. Additional carbon credit futures contracts will be followed once they meet liquidity requirements on developed market exchanges. The European Union Allowance credits reportedly represented 90% of the total global value of carbon dioxide markets in 2021, with the global value of the entire space reported at 683 billion Euros last year.
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While there are no previous carbon credit related ETF’s trading in Canada currently, there are four such ETF’s trading on US exchanges, which include KraneShares Global Carbon Strategy ETF (NYSE: KRBN), iPath Series B Carbon ETN (NYSE: GRN), KraneShares European Carbon Allowance Strategy ETF (NYSE: KEUA), and the KraneShares California Carbon Allowance Strategy ETF (NYSE: KCCA). They currently trade with AUM’s ranging from US$1.86 billion to US$34.5 million.
The Horizons Carbon Credits ETF is currently slated to begin trading this morning on the TSX. Details on the size of the ETF at launch were not provided.
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