Carbon allowance markets are booming, with 2021 seeing a record year of trading within markets; the Intercontinental Exchange saw a 30% increase in carbon allowance trades worldwide last year, a total of 18.3 billion tons of carbon allowances, reports Reuters.
Prices for California Carbon Allowances rose at a steady rate for most of 2021.
KraneShares views the CCA as a market that is of particular interest because of the engagement in 2021 as well as the potential for tightening of the overall program this year, which could drive prices higher.
The market ultimately ended up correcting 12% based on the auction news, as well as the margin calls that had been taken on leveraged positions, causing some of the most aggressive speculators to wash out, Oliver explains.
KCCA is a fund that offers exposure to the California cap-and-trade carbon allowance program, one of the fastest-growing carbon allowance programs worldwide, and is benchmarked to the IHS Markit Carbon CCA Index.