ETFMG Breakwave Sea Decarbonization Tech ETF (BSEA) provides investor access to a diversified set of global companies that develop technologies, manufacture equipment or provide services related to marine or ocean decarbonization.
Ocean Health: Did you know?
“The International Union for Conservation of Nature (IUCN) estimates that, at the global level, when coastal ecosystems like mangroves, salt marshes and seagrasses are degraded, lost, or converted, massive amounts of CO2—an estimated 0.15-1.02 billion tons every year—are released into the atmosphere or ocean, equivalent to up to 19 percent of global carbon emissions from deforestation.”
- -Linwood Pendleton, Daniel C. Donato. Estimating Global “Blue Carbon” Emissions from Conversion and Degradation of Vegetated Coastal Ecosystems. 2022.
Key Development: Amazon, Target, IKEA & REI Join Coalition to Eliminate Ocean Freight Emissions
PwC highlighted the “lack of communication, collaboration and technological alignment between different parts of the supply chain, including countries, carriers, ports and manufacturers” as a barrier that makes shipping a frequently overlooked sector for decarbonization investment. But a new alliance among many of the top charterers is demanding zero emissions vessels.
Having a group of influential charterers who have pledged to hire zero-emissions ships means that shipowners now have the ability to begin integrating zero-emissions ships into the fleet.
Cargo Owners for Zero Emission Vessels (coZEV), facilitated by the Aspen Institute, announced that it will switch all its ocean freight to vessels powered by zero-carbon fuels by 2040. This is significant because the list of coZEV signatories contains large and influential names such as Amazon, IKEA, Target, Unilever, Philips, Dupont, REI, and others.
Ships are extremely large – sometimes as long as the Empire State Building is tall – and the high cost to build them makes it difficult to justify adding machinery and systems that charterers are not willing to pay for. Pair that with the premiums associated with implementing and operating new, complicated technologies and you have a market disinterested in taking unneeded risks. An alliance of charterers who are willing, and demanding, to pay for the expensive development and implementation of new technology required to operate zero emissions vessels means that orders in masse for these types of ships could be on the horizon.
Zero emissions ships will require the complementing infrastructure to produce, transport, and distribute renewable fuels. Because of shipping’s global nature, this infrastructure will need to be in place in many ports across the major shipping routes.
BSEA companies engaged in supplying zero-emission ship propulsion: Ballard Power (USA), Ceres Power (UK), Freyr (USA), ITM Power (UK), Kongsberg (Norway), Powercell (Sweden), Wartsila (Finland), and Rolls Royce (UK)
BSEA companies engaged in developing zero-carbon fuel infrastructure: Aker Horizons (Norway), Alfa Laval (Sweden), Chart Industries (USA), Nel (Norway), New Fortress Energy (USA), OCI (Netherlands), Technip Energies (France), Yara (Norway), McPhy Energy (France), Royal Vopak (Netherlands), and Orsted (Denmark)
Portfolio News:
Yara Clean Ammonia, a subsidiary of Yara (Norway), and Japanese shipping giant MOL have agreed to work together to strengthen the global ammonia supply chain. According to MOL, the collaboration includes but is not limited to using ammonia as a marine fuel.
UK-based BAR Technologies and Yara (Norway) have launched the production of BAR’s solid wing sails. WindWings is an advanced wind-assisted propulsion and route optimization system that can reduce fuel consumption and CO2 emissions by 30% on average trading patterns.
A group of partners, including OCI (Netherlands) and Royal Vopak (Netherlands) led by the Port of Rotterdam Authority, are looking into establishing a facility that would enable the import of 1 million tons of hydrogen per year for the decarbonization of shipping and mobility. As a general rule, one million tons of green hydrogen can facilitate approximately 10 million tons of CO2 reductions.
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477), or by visiting www.etfmg.com/BSEA. Please read the prospectus carefully before investing.
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. The Fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Investments in smaller companies tend to have limited liquidity and greater price volatility than large capitalization companies. The Fund’s return may not match or achieve a high degree of correlation with the return of the Marine Money Decarbonization Index. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Index. Diversification does not guarantee a profit, nor does it protect against a loss in a declining market.
The Index was created by and is owned and maintained by Maritime Transformation Partners, LLC (the “Index Provider”), which has not previously been an index provider, which may create additional risks for investing in the Fund.
Fund holdings and sector allocations are subject to change at any time and should not be considered recommendations to buy or sell any security.
Specific investments described herein do not represent all investment decisions made by Maritime Transformation Partners, LLC or ETF Managers Group LLC. The reader should not assume that investment decisions identified and discussed were or will be profitable. Specific investment advice references provided herein are for illustrative purposes only and are not necessarily representative of investments that will be made in the future.
ETF Managers Group LLC is the investment adviser to the Fund.
The Fund is Distributed by ETFMG Financial, LLC, Member FINRA/SIPC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with Maritime Transformation Partners, LLC or Breakwave Advisors LLC.
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