Carbon Pricing: Investing in a Changing Climate

Introduction to the KraneShares Global Carbon ETF (ticker: KRBN)

By Oktay Kurbanov and Eron Bloomgarden, Partners at Climate Finance Partners

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To say that 2020 brought us major shocks in all aspects of our lives is an understatement. Some compared the COVID-19 pandemic, California fires, social unrest, and political instability to how a climate disaster on a global scale might look. These shocks have affected the investment climate as well, where markets have experienced extreme swings reacting to the pandemic and political news. At this junction, a pressing question for many investors is how to position their portfolios in this changing backdrop of a world desperately trying to disengage from its addiction to hydrocarbon fuels. From this perspective, investing in carbon credit markets is an investment proposition that deserves consideration. 

In this white paper we review fundamental factors supporting carbon prices including:

  • Carbon price as an economic driver for decarbonization
  • Favorable political and regulatory environment
  • Price support and stability mechanisms
  • Analyst forecasts
  • Portfolio diversification from the global carbon allowance market