Carbon Credit ETFs Surge on Coal Power Expansion Outlook

Carbon credit ETFs were among the best-performing commodity funds in May, supported by rising carbon prices and expectations of stronger demand for emissions allowances. The HANARO Global Carbon Emission Rights Futures ETF gained 12.28% over the past month, while the SOL Global Carbon Emission Rights Futures ETF rose 10.40%. Analysts attribute the rally to higher oil and natural gas prices following geopolitical tensions in the Middle East, which may encourage greater coal-fired power generation and increase demand for carbon credits. At the same time, the European Union continues tightening allowance supply under its Fit for 55 framework. Market participants also expect summer electricity demand to further support carbon credit prices in the coming months.
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