The carbon credit market is an emerging sector in the finance industry. It’s not a mainstream investment option, yet it’s gaining popularity. If you’re interested in getting involved, you’ll want to understand the basics. Investing in carbon credits may help you achieve your environmental goals.

There are two basic types of carbon markets. One is a compliance carbon market, and the other is a voluntary market. The former is regulated by regulations, and is therefore a more formalized way to buy and sell carbon. It’s a market where emissions are capped and a company is awarded permits to offset the emissions it produces. This allows a business to meet its emission targets. The latter, on the other hand, is more free-wheeling and fungible. In either case, the price of the carbon will depend on several factors, including demand and supply.

The voluntary carbon credit exchange is divided into different sectors in California, Europe, and the United States. Some countries have implemented carbon credit systems to mitigate their carbon emissions, while others haven’t. Typically, the best way to participate in this type of market is through an exchange-traded fund. These funds allow investors to diversify their portfolios, and are traded on stock markets just like stocks.

A futures contract is a financial instrument that allows investors to buy or sell a specified amount of a particular commodity. It is similar to a stock, and prices are determined according to market expectations. However, it has a higher level of risk than other investments. For example, a futures contract might be worth $80 per metric ton of CO2 by 2035. This could increase to $150 if the carbon credit price rises. Buying a futures contract involves a binding agreement to purchase a specified number of carbon credits at a predetermined time in the future.

A futures contract is much more complex than a stock, but it’s a popular investment tool. It’s more accessible than an exchange-traded fund. Unlike an ETF, a futures contract is a contract to purchase a specified amount of a particular commodity, and the price will vary according to the market’s expectations.

A futures contract can be used by individual investors or institutions. Leveraged trading can be used to amplify the effect of an initial investment. The resulting investment should be in line with the investor’s risk profile. If you’re new to the market, don’t start with a futures contract. Instead, use an exchange-traded fund, or ETF, which offers low-risk investments and allows you to diversify.

If you are interested in participating in the voluntary carbon credit market, consider eToro. This online trading platform provides investors with access to the market and proprietary Smart Portfolios. To invest in eToro, you will need to register and deposit funds. Then, you can trade a variety of commodities, stocks, and other assets. You can also borrow money on the platform.

There are also a number of brokers. These companies act as traders and market their clients’ carbon credits. Usually, they receive a commission for their services.