SparkChange Physical Carbon EUA ETC

Why Invest in a Physical Carbon ETC?

EUAs are increasing in scarcity value:

An EUA is a permit to pollute 1 tonne of CO2 (Source: European Commission). The EU Commission automatically issues fewer EUAs each year in order to decrease CO2 emissions over time, creating the potential for upward price pressure and driving scarcity value. 

100% physically-backed by EUAs:

Each SparkChange CO2 is physically-backed by one EUA which will be adjusted for accumulated management fees since launch. EUAs held within the ETC structure cannot be used by polluters, ensuring direct and positive environmental impact. In contrast, futures-based products do not affect the supply of EUAs. SparkChange CO2 also avoids the performance drag associated with EUA futures-based products. This drag (known as “contango”) erodes the value of a futures-based investment over time, at the expense of the investor. As CO2 uses physical EUAs rather than futures, investors will not suffer from this effect.

Prevents carbon emissions:

This works in three ways: 1) While the physical carbon ETF holds physical EUAs, industrial firms can’t use those EUAs to pollute. 2) Withholding allowances triggers an EU law that results in additional allowances being cancelled in future years. 3) As polluters and investors compete for a reduced supply of EUAs, prices may rise until it becomes too expensive for polluters to continue using dirty fossil fuels, incentivising the switch to cleaner energy. 

Risks

The value of the ETC will be affected by movements in the price of the underlying EUAs, the value may go up as well as down.

The abandonment, termination or non-renewal upon expiration of a trading scheme may cause the price of EUAs to fall (potentially to zero).  

Investors' capital is at risk and investors may not get back the amount originally invested and should obtain independent advice before making a decision. Any decision to invest should be based on the information contained in the relevant prospectus.