KCCA ETF

The price of California's carbon allowances continues to rise in the wake of its most recent auction in November. With further regulatory clarity on the horizon likely early next year, investors find themselves with an opportunity to gain access to the market at reduced costs.

This summer broke heat records yet again, for the second consecutive year. 2024 remains solidly on track for becoming the hottest year on record, underscoring the importance of climate initiatives.

California carbon allowance (CCA) prices continue declining this year due to tightening delays and a lack of clarity from regulators. However, the underlying thesis and long-term outlook for the market remain strong, creating opportunities for investors.

KCCA ETF has had a volatile ride since its launch in 2021, impacted by global carbon market fluctuations triggered by the Russo-Ukrainian War. A delay in the rollout of California's more stringent regulatory amendment has dramatically dragged down KCCA's price. Because of the recent setback, KCCA is momentarily mispriced given the clear trajectory of state's carbon market.

The regulator for the California carbon market held its most recent public workshop this week. On guidance of delaying tightening within the market for another year, carbon allowance prices dropped.

Volatility spiked in the California carbon market this month on lower auction prices and the regulatory body's failure to provide further guidance. Though a volatile asset class, the long-term thesis for the market remains strong.

Advisors and investors are familiar with market fluctuations due to rising inflation and interest rates over the past two years. While volatility can pose challenges for some investors and their portfolios, it can also benefit others by leading to price discovery for assets.

California's Carbon Allowances (CCA) market is expanding as the state of Washington recently passed a bill to connect its cap-and-invest program with the CCA market.

The three primary heat-trapping greenhouse gases increased last year, underscoring the urgent work ahead to curtail emissions. Regulated carbon allowance markets play a critical role in the journey to net zero, providing investors with opportunity.