In 2024, we believe global carbon allowances continue to be one of the most dynamic and exciting investment opportunities in global markets. The beginning of this year has been challenging for performance, driven mostly by the European Union allowance (EUA) market, which is the largest component of the KraneShares Global Carbon Strategy ETF (KRBN).

EUAs are in a narrow window of softness, currently in the middle of a curve flattening as the market absorbs the frontloaded REPowerEU supply introduced last year to fund the bloc’s transition to greater energy independence, while muted industrial recovery weighs on demand. However, at these levels, we believe EUAs are positioned for a considerable correction back up to their previous pre-Ukraine invasion prices, especially as the market soon begins fully pricing in the upcoming supply-tightening policy reform measures. Meanwhile, California allowances (CCAs) are riding high on policy momentum. The KraneShares California Carbon Allowance Strategy ETF (KCCA) ended the year up over 34%¹, and CCAs should keep this upward trajectory as the regulator finalizes the reform proposal.

Download our winter climate report for our full update on carbon markets.

Winter Climate Report Contents:

• YTD KRBN Performance Update
• Climate Suite Performance and Futures Pricing Tables
• Q4 2023 Commentary for KRBN’s Four Carbon Markets
• Carbon Correlations, Market Modeling & Performance

1. Data from Bloomberg as of 12/31/2023

For KRBN standard performance, top 10 holdings, risks, and other fund information, please click here.

For KCCA standard performance, top 10 holdings, risks, and other fund information, please click here.