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Investments In Carbon Credits

May 09, 2012 10:30 AM ET
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Investors can spend in forestry projects to generate carbon which can be traded at various markets. Australian carbon credit market ensures to provide a high rate of AUD 23 per tonne for CO2 emissions and Brazilian rainforests serve as one of the greatest source of carbon sequestration. West Africa is known for low cost agricultural and forest land and it can be bought to invest in carbon credit generation projects.

Investing in emission sequestration provides high flexibility to investors and hence, it is getting very popular which allows specialized investment strategies to ensure movement into the most popular areas of the market of green investments and now-a-days, CO2 is a form of asset, which are considered safe and secure as compared to stocks and shares.

There are two ways of investing - either you can trade CO2 as a commodity or you can invest in credit generation schemes by purchasing land. The CO2 investment trading firms provide trading strategies, provisions; fees structure, valuation and redemption methodologies and investors can get a clear picture of the whole process of carbon credit investment.

Australian Carbon Credits

Carbon Farming Initiatives of Australian government backs farming projects and the buyback price for emissions is at $23 per tonnes, which is 40% above the average market price in the EU. Investment firms offer to invest in opportunities in forestry projects mostly in Gippsland in Victoria, where the licence for a 15-year term of ownership of land is set at $13,850 per plot. The price includes management, planting, maintenance, administration and insurance cost. At a low entry level the opportunity provides a secure way to gain exposure to this market and generate strong returns in the range of 30% to 365%.

Brazilian Carbon Credits

Investment opportunities in the Brazilian Rainforests is considered ideal for carbon credit generation as the rainforests absorb at least 20% to 30% of the total emissions into the atmosphere and these forests are superbly located close to Belem, offering great provisions for emission sequestration. The credits generated from Brazilian rainforest is REDD, which is considered highly valuable.

African Carbon Credits

Investors can purchase land in the Gola forest of Sierra Leone to earn credits. The land is bought and registered in the name of the buyer, and a local management company provides services to ensure that the land is accredited for the generation of carbon credits from the plots owned by the investors. The credits generated on these lands are REDD Carbon credits and they can be sold at various exchanges. Carbon can also be generation from agriculture and farming projects. Rice farming is considered ideal for generating carbon credits and it also promoted in West-Africa to generate carbon credits. Mostly wasteland or unused wetland is turned into agricultural land for generating carbon credits. Since the waste land starts giving harvests in a few years, its value also rises with a conservative rate of 7%.

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