Can you invest in carbon credits? A complete 2026 guide
Carbon credits are increasingly discussed as an alternative asset class, driven by corporate demand, regulated carbon markets and new financial products offering exposure. Here is how the market works as an investment, what your options are, and why it is more complicated than most coverage suggests
Financial information only
This article is for informational and educational purposes only. It does not constitute financial advice, a recommendation to buy or sell any investment, or a personal investment recommendation. Carbon market investments carry significant risks including high volatility, regulatory risk, and liquidity risk. Please consult a qualified financial adviser authorised by the FCA before making any investment decision.
Carbon credits are increasingly discussed as an alternative asset class, driven by corporate demand, regulated carbon markets and new financial products offering exposure. Here is how the market works as an investment, what your options are, and why it is more complicated than most coverage suggests.
Two very different markets
Before discussing carbon as an investment, separate the two markets. Compliance market allowances, such as EU ETS allowances and UK ETS allowances, are regulated instruments traded by covered industries and financial participants. Voluntary carbon credits, such as VCS credits, Gold Standard credits and engineered removal credits, are usually purchased by companies and individuals to offset emissions voluntarily.
These markets have different characteristics, different participants, and different investment dynamics. Most retail investor access products focus on compliance market exposure, particularly the EU ETS.
EU ETS: the most investable carbon market
EU ETS allowances are the most liquid and institutionally established carbon instrument. EUAs are traded on ICE Endex and other exchanges, with significant financial participation alongside industrial buyers. The price has ranged from under €5 in 2017 to over €100 in 2023, but it moves daily, so investors should check current market data before treating any article figure as a live quote.
For retail investors, direct EUA trading requires a brokerage account with commodity derivatives access, which is not straightforward and not suitable for most. More accessible routes include carbon ETFs and ETCs that provide price exposure without direct futures trading.
Carbon ETFs and ETCs available to UK investors
| Product | Market exposure | Structure | OCF | Notes |
|---|---|---|---|---|
| SparkChange Physical Carbon EUA ETC | EU ETS (EUAs) | Physically backed ETC | ~0.89% | Holds real EUAs; LSE listed |
| WisdomTree Carbon ETC | EU ETS (EUA futures) | Futures-based ETC | ~0.35% | Futures roll costs apply |
| iPath Series B Carbon ETN | Global carbon markets | Exchange-traded note | ~0.45% | US-listed; less accessible to UK retail |
| KraneShares Global Carbon Strategy ETF (KRBN) | EU ETS + California + RGGI | Futures-based ETF | ~0.78% | US-listed; broad carbon market exposure |
Product availability and fee structures can change. Verify with your platform and the product provider before investing.
The voluntary carbon market as investment: limited direct retail access
Direct investment in voluntary carbon credits is not straightforward for most retail investors. Credits are project-specific, have variable quality, and there is no standardised exchange infrastructure equivalent to the EU ETS. Some platforms facilitate wholesale credit trading, but these are primarily institutional or specialist markets.
Some fintech platforms have attempted to offer retail access to voluntary credits, but regulatory treatment of voluntary credits as investments is unclear in most jurisdictions, and many such platforms have had a difficult track record. Approach claims of voluntary credit "investment returns" with significant scepticism.
Market context: compare voluntary credit prices
The price guide below is useful context for understanding why voluntary credits are not a single asset class. Prices can vary widely by project type, standard, vintage, durability and buyer demand. Do not treat these figures as investment quotes or recommendations.
Live price guide via The Carbon Workbench
Key risks
Policy risk is the largest. EU ETS prices are determined by regulatory design decisions. Changes to the cap trajectory, the Market Stability Reserve or future phase design could move prices materially. Carbon markets can reprice sharply on political news.
Liquidity risk is material for voluntary credits specifically. There is no guaranteed market to sell credits if demand weakens, and quality concerns (as seen in the 2023 REDD+ crisis) can make entire categories of credits essentially unsaleable.
Concentration risk applies to carbon-specific ETCs and ETFs. These products provide narrow exposure to a single commodity, unlike a diversified equity ETF.
Key takeaway
EU ETS carbon allowances are the most investable carbon instrument, accessible via physically backed or futures-based ETCs listed in London. Voluntary carbon credits have very limited structured retail investment routes and carry significant quality and liquidity risk. Carbon market investments are volatile, policy-sensitive, and concentrated - not suitable as a core portfolio holding. This article is informational only and not financial advice.
Carbon credit investing FAQ
Can retail investors buy carbon credits directly?
It is possible in some cases, but it is not simple or usually appropriate. Voluntary credits are project-specific, quality varies and resale liquidity can be poor. Many retail investors use listed products for carbon price exposure instead.
Are EU ETS products the same as voluntary offsets?
No. EU ETS products track regulated compliance allowances. Voluntary offsets are project-based credits used for voluntary claims. They have different rules, buyers, liquidity and risks.
What is the biggest risk?
Policy risk. Carbon markets are created by regulation, so changes to caps, eligibility, market stability rules or political priorities can move prices quickly.