Carbon credit trading

Carbon credit trading

Carbon credit trading

Carbon credit investment is a relatively new concept with governments and organisations around the world putting more and more emphasis on renewable energy sources. Governments are also putting more pressure on companies to reduce their carbon footprint, they can do this by buying carbon credits.

The definition of a carbon credit:

"The actual definition of carbon credits can be a contract or permit for the right to emit one tonne of carbon or carbon dioxide."

Where the average investor can get involved is by buying up carbon credits and trying to sell them to other investors or to companies looking to comply with carbon credit quotas. This is essentially carbon trading or trading carbon credits and has created a whole new market for investors.

Caution must be taken however as whilst most large banks are proclaiming this as the next big thing, there are more and more cases coming to light of carbon credits being sold at inflated prices. Carbon credits are not a commodity in themselves and are really thin air if there is no chance of selling them on. The value of a carbon credit is hard to quantify and the true price is hard top guage.

One thing is certain however and that is that carbon credit trading is becoming ever more popular as a method of investment and the perceived benefits do seem attractive for investors. It is still categorized as a high risk investment as many say the carbon credit market has yet to really take off, but with more and more emphasis on alternative energy this could be a good area to consider.

Carbon credit investment is a relatively new concept with governments and organisations around the world putting more and more emphasis on renewable energy sources. Governments are also putting more pressure on companies to reduce their carbon footprint, they can do this by buying carbon credits.

The definition of a carbon credit:

"The actual definition of carbon credits can be a contract or permit for the right to emit one tonne of carbon or carbon dioxide."

Where the average investor can get involved is by buying up carbon credits and trying to sell them to other investors or to companies looking to comply with carbon credit quotas. This is essentially carbon trading or trading carbon credits and has created a whole new market for investors.

Caution must be taken however as whilst most large banks are proclaiming this as the next big thing, there are more and more cases coming to light of carbon credits being sold at inflated prices. Carbon credits are not a commodity in themselves and are really thin air if there is no chance of selling them on. The value of a carbon credit is hard to quantify and the true price is hard top guage.

One thing is certain however and that is that carbon credit trading is becoming ever more popular as a method of investment and the perceived benefits do seem attractive for investors. It is still categorized as a high risk investment as many say the carbon credit market has yet to really take off, but with more and more emphasis on alternative energy this could be a good area to consider.

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