John Kerry is betting that Wall Street will succeed where governments failed in the fight against climate change.
The former U.S. secretary of state and one-time presidential candidate is throwing his weight behind the KFA Global Carbon ETF, an exchange-traded fund tracking the three most robust markets for carbon credits. Based on an index developed by IHS Markit Ltd. and Climate Finance Partners, the ETF begins trading Thursday under the symbol KRBN.
The fund offers retail investors exposure to the carbon credit market, one of the chief mechanisms for limiting greenhouse gas emissions under the Paris climate accord Kerry helped negotiate in 2015. Kerry is also hoping the ETF will help set a single worldwide price for carbon — a crucial steppingstone the framers of the Paris agreement couldn’t agree on.
“We are leapfrogging to the stock exchange,” Kerry said in a phone interview.
Kerry is an adviser to Climate Finance Partners and owns a small stake in the firm co-founded by Eron Bloomgarden and Richmond Mayo-Smith. New York-based Krane Funds Advisors runs the ETF with Climate Finance Partners as a sub-adviser.
The ETF will employ futures contracts as it seeks to outperform the IHS Markit Global Carbon Index, a benchmark that reflects pricing on emissions trading systems developed by the European Union, California and a group of states in the Northeastern U.S. Credits trade for roughly $30 per carbon ton in the EU, $17 in California and $6 in the Northeast.
China, the world’s largest greenhouse gas emitter, is starting an emissions trading system this year that will probably be added to the index, said Jonathan Krane, founder of Krane Funds.
“A lot of countries are launching carbon credit markets,” he said. “As those exchanges become more liquid, they will be good candidates to add into our carbon fund.”
President Donald Trump announced in 2017 that the U.S. would begin the multiyear process of withdrawing from the Paris Agreement.