TRADED PRODUCTS

To achieve your desired risk profile in the carbon market, whether it is for trading or hedging purposes, you can utilize different instruments to best suit you:

Spot transactions
Buying or selling carbon credits with spot (immediate) delivery has the advantage that counterparty risk is minimized. When buying carbon credits on a spot-basis, you can be sure that the carbon credits will be in your account for compliance. When selling carbon permits, it is the quickest way to monetize your carbon assets.

Forward transactions 
Buying or selling carbon permits at a future date allows you to mitigate the impact of adverse price movements or to profit from changing demand and supply fundamentals affecting the market. It allows you to mitigate or increase your price risk associated with carbon permit prices. Transacting on a forward basis can also reduce your cost of financing. Trading at future dates, however, exposes you to counterparty credit and market risks.

Options transactions
Buying an option allows you to insure against future price rises or falls without having an obligation to make delivery or accept delivery of the underlying carbon credits at a pre-determined date. Your losses are limited to the premium you pay for this insurance. Selling options can carry substantial risks for your business and obliges you to either make delivery of carbon credits or accept delivery of carbon credits at pre-determined prices at a future date.