VanEck launches global carbon credits ETF

VanEck has announced the launch of the VanEck Global Carbon Credits ETF, Australia’s first carbon credit exchange trade fund (ETF), which will track the ICE Global Carbon Futures Index which sources carbon credit futures prices from the four most actively traded and largest carbon market and emission trading schemes (ETS) in the world.

A carbon credit is a permit that allows a company that holds it to emit up to a certain amount of carbon dioxide or other greenhouse gases, with the purpose to limit the extent of pollution caused by emission of carbon dioxide or other greenhouse gasses by taxing companies.

According to VanEck’s chief executive and managing director, Asia Pacific, Arian Neiron, one of the benefits of global carbon credit futures was that they could be freely traded on global exchanges with attractive market size and liquidity.

According to forecasts, carbon credit prices would be expected to reach over US$100 per tonne of CO2. The price of EUA futures December 2022 contracts is €83 per ton of CO2. It was estimated that carbon credit prices “would need to reach US$147 per ton of CO2 to meet a 1.5°C global warming limit by 2050.

“Australia currently does not have a carbon credit ‘cap and trading’ scheme. With the new Labor government now in power and climate change front and centre, time will tell if climate policy will be more ambitious in mitigating greenhouse gas emissions and align to the likes of the European Union,” Neiron said.

“This opportunity is important because it gives investors access to a global marketplace for carbon credits. Importantly, carbon credit prices are expected to increase significantly as the fight against climate change gains momentum. This will raise the value of carbon credits futures and this asset class will likely benefit significantly over the longer term, making it attractive for investors to get exposure.”