New York, NY – December 2, 2024 – Krane Funds Advisors, LLC ("KraneShares"), an asset management firm known for its global exchange-traded funds (ETFs), announced that it added Washington state’s cap-and-trade carbon allowance market to the KraneShares Global Carbon Strategy ETF (Ticker: KRBN). Washington carbon allowance (WCA) futures now represent a 5% weight in KRBN.

The move to include Washington carbon allowances in KRBN follows a show of overwhelming voter support for these markets on November 5^th 2024.  A referendum to repeal Washington state’s Climate Commitment Act that established the state’s carbon markets was struck down by a margin of 62% to 38%¹.

“KraneShares strives to be at the forefront of carbon market investing with our flagship KRBN ETF," said Luke Oliver, Head of Climate Investments at KraneShares. "The development of Washington’s cap-and-trade market underscores the importance of regional markets in the sustainable-energy transition. As the adoption of cap-and-trade systems expands, we believe exposure to these markets is becoming an essential consideration within investors’ portfolios."

The KraneShares Global Carbon Strategy ETF (KRBN) is benchmarked to the S&P Global Carbon Credit Index, which offers broad coverage of cap-and-trade carbon allowances by tracking the most traded carbon credit futures contracts. The index introduces a new measure for hedging risk and going long the price of carbon while supporting responsible investing.

In addition to its latest Washington holding, the index also covers the other major European and North American cap-and-trade programs: European Union Allowances (EUA), California Carbon Allowances (CCA), United Kingdom Allowances (UKA), and the Regional Greenhouse Gas Initiative (RGGI), which covers the Northeast US Power Market.

“Since the outset, Climate Finance Partners (CLIFI) and KraneShares worked with S&P to design KRBN’s index to evolve alongside the growing and dynamic global carbon markets,” said Eron Bloomgarden, co-founder and CEO of CLIFI. “The inclusion of Washington State within KRBN represents a significant step forward for price discovery in carbon markets, which now cover over 25% of global emissions.²”

What are carbon allowances?

Compliance carbon allowances trade under cap-and-trade programs known as Emissions Trading Systems (ETS). These systems create transparent, liquid markets that are government-mandated and regulated. The value of these markets reached nearly one trillion USD in 2023.³ Carbon allowances are distinct from project-based carbon offsets and offer a market-based approach to regulating a region's emissions, with mandatory participation for specified industries. Carbon allowance supply is managed by government agencies and adjusted primarily through an annually declining cap. 

For more information on the KraneShares Global Carbon Strategy ETF (Ticker: KRBN), please visit https://kraneshares.com/krbn or consult your financial advisor.

About KraneShares

KraneShares is a specialist investment manager focused on China, Climate, and Alternative Assets. KraneShares seeks to provide innovative, high-conviction, and first-to-market strategies based on the firm and its partners' deep investing knowledge. KraneShares identifies and delivers groundbreaking capital market opportunities and believes investors should have cost-effective and transparent tools for attaining exposure to various asset classes. The firm was founded in 2013 and serves institutions and financial professionals globally. The firm is a signatory of the United Nations-supported Principles for Responsible Investment (UN PRI).

About Climate Finance Partners (CLIFI)

Climate Finance Partners delivers innovative climate finance solutions and investment products to scale capital into climate impact. CLIFI is an impact focused investment firm and is led by a team of professionals with deep experience in the fields of investment and environmental and climate finance.

Citations:

1. Kerber, Rosss, “Carbon markets give environmentalists hope after US elections,” Reuters. Nov 12, 2024.
2. World Bank, “State and Trends of Carbon Pricing 2024,” May 21, 2024. Note, carbon
3. Reuters, “Global carbon markets value hit record $909 bln last year,” Feb 7, 2023.
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