I have just been approached by a company to invest in carbon trading.

It has the whiff of a scam or at least a very dodgy investment.

• Where do these Carbon credits come from? They are issued to companies but how do they get in the hands of private investors. I do understand there may be a futures market with contracts traded there.
  
• If I manage to get hold of a small lot of Carbon credits who will buy it from me?
  
• The price seems dependent on the politics of how many credits are issued and enforcement of carbon caps.
  
• Most of these trades are not covered by the FSA in the UK, they can simply walk off with the money.
  

Has anyone invested in Carbon credits?

Surely a scam.

"Carbon Credits" are issued to companies on an allocation based on their estimated "usage" by the government.

The definition was done in the year prior to the first year of the issue of Carbon Credits.

Each year, the amount of the credits goes down, so that the companies have to buy credits in order to continue to operate.

Companies that engage in "Green" activities over and above their CC limits get more credits. They can then sell the excess credits to the companies that need to buy them.

Failure to have enough credits will result in fines and penalties to the companies who don't have enough credits, or are forced to shut down. If there aren't any new "Green" activities to generate more credits, the overall number of credits keep going down, forcing companies to use less carbon to operate.

Now, you can start a "Carbon Mitigation" company and ask people to donate money to allow you to do things that reduce carbon usage, like planting trees.

The fun is, you don't have to do anything with the money and just enhance your lifestyle.

Pretty sweet scam that made a huge chunk of money for Al Gore.

The following site will provide you with more information. It appears to be a legitimate business but it is early days and there are many new approaches to Carbon trading e.g. Australia. I would regard it as a very high risk investment as indicated by the claimed returns, I think that the credits would be easy to buy but maybe difficult to sell .

www.cco-online.com