Horizons ETFs Management is launching an ETF to provide exposure solely to carbon credits. 

The investment objective of the ETF is to replicate the performance of an index that provides exposure to investments in cap-and-trade carbon allowances. Currently, the ETF seeks to replicate the performance of the Horizons Carbon Credits Rolling Futures Index (Excess Return) net of expenses.

Carbon credits are permits issued through a regulatory organization designed to reduce participants’ output by requiring the use of carbon credits to offset the emission of an amount of carbon dioxide or equivalent greenhouse gases. 

ETF can be a hedge against climate change 

The investment will let investors gain exposure to an investment strategy that could help reduce pollution, providing a potential hedge against climate change and rising carbon costs. 

"Not only do we believe that carbon credits are an instrument that can help in the fight against climate change, we believe this asset class could provide a powerful investment opportunity for Canadian investors,” said Steve Hawkins, president and CEO of Horizons ETFs. 

In Europe, carbon credits are administered under the European Union's Emissions Trading System (ETS), the world's first cap-and-trade marketplace. Since its launch in 2005, the ETS has successfully helped reduce European emissions from power generation and energy-intensive industries by 42.8%.