Greenhouse gas emissions in the European Union fell by 11% in 2020 compared to 2019, the sharpest fall since 1990 and a downward trend spanning three decades, the European Environment Agency reported in a press release.
The EU far surpassed its 2020 target of a 20 percent reduction in emissions compared to 1990, ending the year with a 34 percent reduction, or the equivalent of 1.94 billion tonnes of CO2e, a carbon dioxide equivalent.
The bloc had actually met its targets as of 2019, before the onset of the pandemic, reducing emissions by 26%, with 2020 performance extending that reduction.
“Key drivers leading to emissions reductions over the past three decades include increased use of renewable energy, use of less carbon-intensive fossil fuels and improvements in energy efficiency, structural changes in the economy, reduced heating demand due to warmer winters in Europe” , according to the press release.
With the exception of transportation and refrigeration and air conditioning, cuts have been seen across the industry; The largest contributors to the decline were manufacturing and construction, iron and steel production, residential incineration, and power and heat generation.
A supportive political regime since the 1990s has played a major role in driving change and emissions reduction, working to transform agricultural and environmental policies over the past 30 years, with more targeted energy and climate policies since 2005.
How to invest in compliance and voluntary carbon markets
KraneShares offers a targeted investment opportunity in the cap-and-trade futures markets for EU carbon allowances and a broader, globally oriented investment that includes futures on the EU allowance market as part of its exposure, as well as an investment exposure to voluntary carbon markets worldwide.
That KraneShares European Carbon Allowance ETF (KEUA) offers targeted exposure to the EU carbon credit market and is actively managed. The fund’s benchmark is the IHS Markit Carbon EUA Index, which tracks the most traded EUA futures contracts, the oldest and most liquid market for CO2 certificates.
The market currently covers around 40% of all emissions from the EU, including 27 member states plus Norway, Iceland and Liechtenstein. KEUA has an expense ratio of 0.79%.
That KraneShares Global Carbon ETF (NYSE:KRBN) offers a global approach to investing in carbon credit markets and diversity in its exposures. KRBN tracks the IHS Markit Global Carbon Index, which tracks the most liquid carbon credit futures contracts in the world.
These include contracts from the European Union Allowances (EUA), California Carbon Allowances (CCA) and Regional Greenhouse Gas Initiative (RGGI) markets. KRBN carries an expense ratio of 0.78%.
That KraneShares Global Carbon Offset Strategy ETF (KSET) is the first US-listed ETF to offer investors exposure to the voluntary carbon markets by tracking carbon offset futures contracts composed of nature-based global offsets (N-GEOs) and global offsets (GEOs). , which are traded through the CME Group.
Similar to KRBN, KSET is dynamic, so new markets are added to the fund as they reach their size. The fund has an expense ratio of 0.79%.
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