New Listing

DWS launches physical carbon ETC

Offers exposure to EU carbon allowances

Theo Andrew

Simon Klein

DWS has launched a physical carbon exchange-traded commodity (ETC) tracking the performance of the spot price for EU carbon emissions.

The Xtrackers Physical Carbon EUA ETC Security (XEAL) is listed on the Deutsche Boerse with a total expense ratio of 0.79%.

The reference market for the spot price is determined by the European Energy Exchange and is physically secured by holding emission certificates.

The market is an attempt by policymakers to combat pollution. Companies that emit carbon dioxide hold certificates – emissions rights – issued by the EU which represents one tonne of carbon.

Emission allowances are limited by the EU so if a company wants to emit more carbon than it has certificates, it is required to buy the rights of other companies.

XEAL is the second physically-backed EU Carbon Allowance (EUA) ETP to hit the European market.

In November 2021, SparkChange launched the world’s first physical EUA ETP, the SparkChange Physical Carbon EUA ETC (CO2), in partnership with HANetf.

CO2 has amassed $76m assets under management with a TER of 0.89%.

WisdomTree was the first to launch a carbon ETP in Europe, the WisdomTree Carbon (CARB) which tracks carbon futures. The ETF has amassed $243m AUM since launching in August 2021.

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