EU carbon credits launched in 2005 at a price of €16 trades at around €88 today, hence, also seen as an attractive investment opportunity.
But, all is not rosy with the carbon market. It has got some serious loopholes.
Firstly, the regulations are not same throughout the globe and companies can easily shift their production to less stringent geographies, though EU has introduced a Carbon Border Tax to counter this which taxes goods imported from countries with high carbon emissions.
Another problem is with the prices.
Also, if the additional credit over and above the allotted credits cost less than what companies will incur in shifting to cleaner sources of energy, they’d rather buy credits than investing in green energy.
According to some economists, if carbon credits are to make a significant impact the prices need to be between $50-$100/MT but the global average price is less than US$10 today.
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