iNVEZZ Explains Why Carbon Investment Is Not Suitable for the Retail Investor in a New Editorial

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Investors’ portal iNVEZZ recently published a new editorial looking into the specifics of carbon investment. Tsveta Zikolova, the author of the analysis, explains in detail what carbon credits are and why they are not a retail investment product.



The lack of a clear and liquid market for owners of small volumes of carbon credits is another major concern.

Tsveta Zikolova of investors’ portal iNVEZZ recently uploaded a new analysis focusing on carbon credits and why they are not a suitable alternative for the retail investor. Although carbon investment has enjoyed significant popularity over the past few years, it is also associated with considerable risks which make it a highly inappropriate retail investment product. To provide a broader perspective on carbon investment, Ms Zikolova outlines the history of carbon credits, explaining how they came into being with the Kyoto Protocol in 1997. Ms Zikolova notes that carbon credits, or carbon offsets as they’re also called, were introduced “as a way of commoditising carbon emissions and creating a financial incentive for nations and companies to reduce their greenhouse gas emissions”.

The author of the editorial then goes on to explain how and where carbon credits are traded, providing information about compliance markets such as the Clean Development Mechanism and the EU Emissions Trading System. Ms Zikolova then focuses on the voluntary approach to carbon offsetting and looks into the supply and demand mechanism on voluntary carbon markets. In the editorial, Ms Zikolova also outlines the current carbon market trends, both as regards the compliance and voluntary carbon markets. Ms Zikolova then continues by explaining why she believes carbon credits are not suitable for the retail investor. One of the concerns presented in the analysis is the doubt over the future of carbon credits, given the recent history of carbon offset prices only going down. The lack of a clear and liquid market for owners of small volumes of carbon credits is another major concern.

Ms Zikolova also warns that investors interested in carbon credits should be wary of unscrupulous sales agents taking advantage of the somewhat vague nature of carbon credits, which has made them an attractive vehicle for fraudsters and con artists. Concluding her analysis, Ms Zikolova explains that there are simply too many significant considerations, foremost amongst which is the lack of a clear and liquid trading mechanism which make carbon investment an unsuitable choice for the retail investor.

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John Adam
iNVEZZ Limited
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