How to invest in carbon credits: strategies, risks & profitability tips for 2025

Eco-conscious companies around the world are investing in carbon credits.

‍

Doing so allows them to maintain compliance by offsetting greenhouse gas emissions, build a sustainability-centered brand, and most importantly, fight the global climate crisis.

But what does "invest in carbon credits" actually mean? And how do you acquire credits for your organization? In this article, we explore the carbon credit market, explaining what these credits are, why they're important, and how to invest in them the right way.

What does it mean to acquire carbon credits?

Companies invest in carbon credits for different reasons: to offset carbon emissions from normal operations, to improve the environment and build a greener future, or to make a profit.

Those that invest in credits for emission reduction purposes, to improve the environment, to build an eco-friendly brand, or to drive profits are known as corporate buyers. They participate in both cap and trade emissions trading systems and the voluntary carbon credit market. Those that only invest in credits to make a profit are called investors. They tend to participate in the voluntary market exclusively. 

In this article, we focus on the second group—investors. These companies view carbon credits as a financial asset they can use to make money. This is usually done in one of three ways:

• Spot buying/holding credits: Investors buy ex-post carbon credits, i.e. credits that have already been issued because the carbon offset projects they represent are completed. Said investors then resell these credits at higher prices to generate profit.
• Forward contracts/future delivery: Investors buy pre-issuance (also known as ex-ante)carbon credits, i.e. credits that have NOT been issued because the projects they represent are still in development. After the project is finished, investors sell the credits for more than they bought them for. This strategy does have risks. The purchased credits might never be delivered. Also, the price of said credits might decrease in the time it takes for the futures contracts to finalize.
• Project investment: Investors can work closely with project developers to support climate change projects that reduce greenhouse gas emissions. When these projects come to fruition, said investors sell the carbon credits, either directly or on a platform like the Carbon Trade Exchange.

Who is investing in carbon credits today?

There are four main entities that invest in carbon credits. Each does so in a different way—and often for different reasons.

• Corporations: Many large corporations procure carbon credits to adhere to regulations or to meet net-zero commitments and offset their emissions. Some of the major players in this space, like Microsoft, work closely and invest early in the development of emerging projects. (Direct Air Capture, in Microsoft’s case). By investing early in the field, the company enhances its ability to scale effective solutions and drive down the costs associated with carbon capture.
• Collaborative commitments: The Frontier Advance Carbon Market Commitment (inc. Google, Meta, Stripe, McKinsey & Shopify) is one example of a collaborative initiative designed to invest in the development of carbon projects. The goal is to provide the needed growth capital to drive significant emissions reductions.
• Financial management & advisory firms: These large consultancies and firms are increasingly active in the carbon credits market. They seek to support sustainable projects that align with their values, while generating financial returns, contributing capital to innovative carbon offset initiatives that help combat climate change.
• Trading Desks: Trading desks and speculators are engaging in the carbon credits market by buying and selling credits, often through futures contracts. They seek to profit from price fluctuations, contributing liquidity and efficiency to the market, while helping corporations manage their carbon exposure and compliance costs.

7 tips to maximize returns when investing in carbon credits

With so much movement in terms of policy pressure and competition, you might be thinking, "How can I invest in carbon credits in 2025?" Great question. These seven tips will help you invest in carbon credits the right way.

1. Vet project quality before investing

Not every regional greenhouse gas initiative is worth it. Find projects that will produce revenue for your organization and lower carbon dioxide and other negative environmental factors.

How do you do that? You vet each project. This is easily done with Sylvera's Discover suite of tools. For example, our centralized Catalog will give you access to 20,000+ carbon projects. You can then filter results to find projects that fit your carbon credit investment strategy.

Once you narrow down the list, you can see independent ratings for each project based on in-depth, third-party research. Said research even includes location-based information, so you can compare different carbon markets in both first-world and developing countries. All of these features are designed to help you make wiser, more profitable investments.

2. Invest early with pre-issuance insights

The carbon project lifecycle has eight stages:

Feasibility study, project design and documentation, validation by independent auditor, registration with the registry, project implementation and monitoring, verification by an independent auditor, and ongoing monitoring and future verification.

Pre-issuance covers the first four stages from feasibility to implementation. By investing in carbon projects at this stage, you can lock in higher quality credits at lower market prices. And you’ll be able to influence the quality of projects as well, which could lead to higher returns.

Finally, by making early-stage green investments, you'll ensure more high-quality carbon projects make it to the market. This fundamentally helps build a low carbon economy and impact climate change.

Sylvera's Pre-Issuance Solution will give you access to the most comprehensive early-stage project guidance in the industry. That way you can invest in the best early-stage projects with confidence.

3. Use market data to time buys & sales

When should you invest in environmental projects? Or procure carbon credits from a trusted carbon exchange? Or sell said credits on that same exchange?

It's all about timing. If you can buy low and sell high, you'll make a profit. The question is, how do you time the market? It's not easy to do, but Sylvera makes it possible.

For example, our Pricing Data feature monitors pricing trends over time and across vintages. It also clarifies current market pricing across various credit types. Just as important, our Connect to Supply tool will streamline the carbon credits procurement process so you get the credits you need in less time. The result? A low-cost investment portfolio with strong upside.

4. Diversify across project types & regions

A diversified portfolio is a strong portfolio. Invest in multiple carbon project types and regions. Doing so will protect your company from delivery risk, regulation changes, and other issues.

For example, you can invest in the electrical power industry and build wind farms in the United States. Or reforestation projects in African countries to sequester more carbon dioxide and limit the effect of carbon emissions. Or renewable natural gas projects in Europe.

As mentioned, Sylvera will help you vet these projects and make quality investments. But what if you come across a project that isn't already in our full Ratings database? Our Estimated Rating feature will give you accurate information quickly, so you can make better decisions.

5. Monitor your investments over time

What do you do after you invest in a carbon project or procured carbon credits? You monitor your investment to ensure ongoing quality and alignment with current market trends.

With Sylvera's Project Monitoring tool, you can track project progress. That way you can make necessary adjustments to prevent non-performance and ensure credit issuance. 

You can also get deep Jurisdictional Intel, which will help you understand regulations in various locations. This understanding will help you stay ahead of developments and mitigate risk.

6. Align with verified carbon standards

The world of carbon credits is changing—and regulations and best-practices are changing with it. You need to understand these changes to build a strong carbon credits portfolio.

For example, in 2016, the Paris Agreement went into effect. Years later, Article 6, which outlines ways in which countries can "pursue voluntary cooperation" to meet climate targets, was added. If you don't understand these changes, you won't make sound investment decisions.

The same goes for government bodies and regulations. The Environmental Protection Agency (EPA) for instance, was established in the United States in 1970 to reduce pollution and preserve natural resources. The agency still works to achieve these goals via new laws.

Then there are organizations like the Integrity Council for the Voluntary Carbon Market (ICVCM). The ICVCM aims to "set and maintain a global standard for high integrity in the voluntary carbon market." Following ICVCM's standards will be important in the future.

Sylvera's Jurisdictional Intel feature can help you pinpoint projects that adhere to government regulations and follow industry best practices, de-risking your investments.

7. Partner with industry experts

Investing in carbon credits is often confusing. Give yourself an advantage by learning from industry experts. That way you have the necessary information to make good investments.

With Sylvera's Market Commentary tool, you'll have access to the data you need, when you need it. Just as important, you'll get expert analysis insights you can use to inform your investment decisions. And you'll get all of this in one, centralized location. These features will almost certainly help your company generate greater ROI.

The risks of carbon credit investing—and how to manage them

You should know about the risks of investing in the carbon market before you connect with project developers and/or buy carbon credits from green companies. 

• Delivery risk: The risk that the number of carbon credits issued is less than predicted.
• Reputational risk: The risk that the carbon credits purchased are poor quality, which could lead to claims of greenwashing and poor public perception for your brand.
• Regulatory risk: The risk that government regulations change and the credits you've procured become inaccessible or unusable—and therefore a waste of money.
• Double counting: The risk that another company will claim the same credit as your company. This can happen by mistake or because of shady seller practices.

Sylvera's Ratings platform takes all of these risks into account and gives each carbon project a rating based on tailored frameworks that were developed through 2,500 hours of research. Ratings are then peer-reviewed for accuracy and delivered to customers for deep analysis. Because of these things, Ratings is an invaluable tool for companies in the carbon market.

Sylvera's Monitoring tools can help too, by flagging project and/or jurisdictional changes early. This will give you more time to adjust—and potentially save—your investment.

Should you invest in the carbon credit market?

While every company can invest in the carbon credits market, not all of them should. Why? Because every organization has a different financial outlook and goals for the future.

First, ask yourself, "Do I need to invest in carbon credits?" An aluminum smelting plant in Los Angeles might need more California carbon allowances. A bakery in San Francisco might not.

Second, ask yourself, "Do I want to invest in carbon credits?" Some people want to support green companies and further climate action with their investment dollars. Other people have different objectives and would rather invest in alternative opportunities.

Third, ask yourself, "Can I make a profit by investing in carbon credits?" Again, you might only invest in carbon credits to reduce greenhouse gas emissions. But if you want your money to compound, this is an important question. Good news: with Sylvera, you can drive profits.

How Sylvera supports smarter carbon credit investment

Sylvera is an excellent tool for carbon market investors. Whether you want to discover interesting carbon projects, investigate carbon project quality, invest in carbon credits, or monitor the investments you've already made, you can do it with our industry-leading platform.

• Discover carbon projects: Access the most comprehensive database of carbon projects to find new and exciting investment opportunities. Our Discover suite also includes country profiles, detailed analyses, and retirement data for in-depth analysis.
• Access detailed project ratings: View trusted, third-party ratings at every stage of the carbon project lifecycle. Our Evaluate platform gives Estimated Ratings and Screenings for quick access to project insights, Pre-Issuance Ratings for projects in early stages of development, and full-fledged Ratings for in-depth details on carbon investments.
• Invest in quality carbon credits: Put your carbon procurement strategy into action. Our Invest Platform gives transparent, reliable Pricing Data so you can identify investment opportunities for your company. It also includes our Connect to Supply features, which you can use to procure carbon credits under one contract via our partner, Xpansiv.
• Invest in early-stage carbon projects: By investing at this stage, companies secure supply of high-quality credits and lock in at favorable prices. Pre-issuance with Sylvera provides everything you need to discover these projects through the Early Stage Catalog, evaluate through Pre-Issuance Ratings, and monitor through quarterly monitoring.
• Monitor your carbon investments: Track your carbon investments with our Monitor platform. Learn about jurisdictional changes that could impact carbon projects. Read expert market analysis to stay on the cutting edge of your industry. And minimize project non-performance through consistent updates on each of your investments.

See how other investors use Sylvera to identify, vet, and track their carbon portfolios.

Purchasing carbon credits doesn't have to be hard

Carbon credit investing is an exciting opportunity. Those who know what projects to look for and how to get the best price on credits have a chance to make good money.

Sylvera was designed to give you the information you need. Use our platform to identify investment opportunities in the carbon market, vet each for quality and potential ROI, procure credits at the lowest prices, and monitor your investments through every stage of the process. 

‍Request a free demo of Sylvera today to see our platform in action and invest with confidence.