Listing today (19 April) on the London Stock Exchange and Borsa Italiana, the WisdomTree California Carbon ETP aims to reflect the movement in the price of ICE CCA Futures.
CCAs are issued by the state’s Air Resources Board in the country’s first multi-sector cap-and-trade emissions trading system, aiming to reduce greenhouse gas emissions to 85% below 1990 levels by 2045, and 48% by 2030.
In 2022, CCA futures traded about $1.7bn a month, WisdomTree added, noting that it was the second most liquid carbon allowance market globally.
Some of the revenues obtained through CCA auctions are used to fund various projects around environmentalism and climate change mitigation.
WisdomTree added the ETP was the seventh in its range of energy transition, including the WisdomTree Carbon ETP, which provides exposure to EU carbon allowances.
Following the Solactive California Carbon Rolling Futures TR index, the ETP has a management expense ratio of 0.49% and will also be listed on Börse Xetra on 20 April, WisdomTree said.
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Nitesh Shah, head of commodities and macroeconomic research at WisdomTree, noted the state’s cap-and-trade program is a “key element” in its plan to reduce emissions, covering roughly 80% of its greenhouse gas emissions.
He added: “California has laid out a path to cut emissions aggressively by 2045 and CCAs will play a larger role in the policy toolkit than ever before.
“The success of the European Union Allowances (EUA) ETS provides a great example of what happens when policy makers get serious about cutting emissions.”
