Carbon Credits – How To Invest

There are limited opportunities to gain exposure to the price of carbon credits, as most investments are precluded from retail investors. Furthermore, investments linked to the generation of carbon credits (for instance via planting trees) are usually long term in nature and are seldom quoted, making direct investments in companies hard.

Stock ETFs

These are not viably available at present.

Individual Stocks

No stocks offer direct gearing towards the price of carbon credits. Some stocks (e.g. exchanges or plantation companies) can provide some form of exposure, however the level of correlation between the price of carbon credits and the stock market price is questionable.

Physical Proxys

Holding physical carbon credits is possible, however in practice it is unpracticable for retail investors to access either these spot markets or futures market. There are however a number of ETCs that track either the future market for carbon credits or purchase (and hold) carbon credits.

Investing in ETCs is currently the most viable solution, as other solutions (e.g. stocks) do not offer sufficient direct exposure to the price of carbon credits.

In the ETFs/ETCs section we highlight the characteristics of the currently quoted vehicles with which to gain exposure to this market.

Last updated: Aug 4, 2022

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