Carbon ETFs: Making Money from Air

Is that sustainable investing?

July 2022. Reading Time: 10 Minutes. Author: Nicolas Rabener.


  • Carbon credit prices vary significantly across markets
  • The price increased by more than 100% since 2020, but it has been highly volatile
  • Investors can get carbon exposure via ETFs, but applying trend following strategies is sounder


News about the environment is usually bad. Once in a while, we might see a fascinating video on LinkedIn about wolves being back in the Yellowstone National Park in the U.S. and rejuvenating the local ecosystem, but most posts and articles are about destructive events like earthquakes, floods, or tornados.

However, given that these events rarely affect us directly, we often, unfortunately, don’t care too much about them. 2022 is different as food prices have been rising globally, which can be attributed to the invasion of Ukraine, one of the largest agricultural and fertilizer producers, and extreme droughts in the US, Mexico, Europe, and other markets. 

Both represent man-made disasters, where the former can be attributed to a single person, ie the Russian president Vladimir Putin, while the latter is borne by almost all of us as we have been contributing to global warming. Fortunately, investors, if they want to, can contribute to battling both issues, eg by selling Russian financial assets and allocating to ESG funds.

More mercenary investors who believe global warming will accelerate and the environmental situation will worsen, can invest in the carbon credits, which should become more valuable in such a scenario. However, carbon trading is a complicated space with unique nuances, which we will explore in this research article.


The carbon credit market is complicated as carbon gets traded via emission trading systems (ETS) in several countries and the price varies dramatically across these. For example, the price per tonne is EUR 84 in Europe currently, but only EUR 12 in South Korea (read ESG vs Low Carbon Investing).

A carbon emitter like an airline company can either implement processes to reduce their carbon emissions, or buy carbon credits on the market. Given different jurisdictions, there are diffe