The Global X Global Carbon ETF (GCO2) launched on 14 December.

Australia’s lowest cost carbon ETF made its debut last month courtesy of Global X ETFs Australia, the Australia-based ETF provider that is a member of Mirae Asset Financial Group. The Global X Global Carbon ETF (GCO2) provides exposure to the price of carbon as driven by the world’s biggest and most developed emission trading schemes. (ESG CLARITY)

The returns of the ETF would be driven by medium to long term growth potential backed by global initiatives and regulations to reach net-zero targets.

Investors also achieve diversification by investing in a unique asset class which is reasonably uncorrelated to other assets including oil prices.

Global X Global Carbon ETF (GCO2)

The new ETF, which has an annual management fee of 0.45%, tracks the ICE Global Carbon Futures Index (AUD Total Return).

The ICE Global Carbon Futures Index tracks an international basket of long futures contracts which are linked to physically tradeable carbon allowances. These long futures contracts are from the four largest ‘cap and trade’ carbon markets in the world, including the European Union Emissions Trading Scheme, Regional Greenhouse Gas Initiative, Western Climate Initiative (California cap and trade program) and the UK Emissions Trading Scheme.

As on November 30 the ETF held the following futures contracts:

• ECX EMISSION Dec23                 57.7%
• UK Emiss Allow Fu Dec23            20.6%
• CalCarbAllowV2023 Dec23          17.6%
• RGGI Vintage 2023 Dec23              4.2%

Fundspeak

“We are witnessing a watershed moment as investors seek out climate-focused investment opportunities, but do not want to compromise on potential returns. GCO2 is an innovative way to leverage the global transition to net-zero, which has significant tailwinds, thanks to government backed climate change targets,” said Global X Head of investment strategy, Blair Hannon.

“Carbon emissions are front of mind for governments and the public alike, so as global decarbonisation and clean energy initiatives become more ambitious, demand for carbon allowances will likely increase – which we expect to push up the price of carbon over the medium to long term.”

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