The existing markets are geared towards large buyers such as institutions and corporates and there is no effective mechanism for trading small amounts of carbon credits online, the analysis states.
London, UK (PRWEB) January 28, 2013
In an analysis entitled “What are Carbon Credits? And Why They are Not a Retail Investment Product”, iNVEZZ.com takes a critical look at carbon credit investments, concluding that they don’t represent a viable investment option for private investors. Amongst the factors cited in the analysis are the low liquidity of the commodity, the lack of established online platforms allowing for small amounts of carbon credits to be traded and the dubious practices employed by some carbon credit brokers.
The article starts by explaining the concept of carbon credits, introduced in 1997 with the Kyoto Protocol. “A carbon credit or a carbon offset is a financial instrument representing one metric tonne of CO2 or carbon dioxide equivalent in another greenhouse gas,” iNVEZZ explains. The website elaborates on the concept, describing in depth its mechanisms and principles.
The website dismisses the notion that investing in carbon credits, especially given the current state of carbon credits trading, is in any way beneficial to private investors. The existing markets are geared towards large buyers such as institutions and corporates and there is no effective mechanism for trading small amounts of carbon credits online, the analysis states. This results in low liquidity for the commodity, leaving retail traders unable to sell their investment at a profit or even at all.
iNVEZZ.com also warns against dubious marketing practices, pointing out that the carbon credit markets are often targeted by unscrupulous sales agents and fraudsters who tempt small-scale buyers with promises of easy profit. The website cites the UK’s Financial Services Authority which, though acknowledging that there are many reputable operators in the sector, has expressed concerns over the increasing number of firms employing dubious and high-pressure sales tactics to attract vulnerable customers.
In conclusion, iNVEZZ.com opines that at this point there are too many uncertainties to justify investing in carbon credits for individual investors.
The full analysis is available at http://www.invezz.com
iNVEZZ.com is a newly launched investment-focused web portal offering news and analysis on a broad range of markets and investment classes, such as forex, equities, commodities, technology companies and energy. The website provides accurate and timely information with up-to-the-minute updates on the latest developments in the global markets.