In-depth Analysis of the Carbon Trading Market: Investment Opportunities and Challenges in 2025

Definition and Mechanism of Carbon Credits

Carbon credits represent the “rights to emit carbon,” which are permits or quotas required to emit a certain amount of greenhouse gases. Governments issue carbon emission quotas based on the total carbon emissions and reduction targets, and companies can buy and sell these quotas in the market.

The main methods of generating carbon credits include:

• Government allocation: Setting and distributing carbon emission quotas according to regulatory policies.
• Market Trading: Entities holding excess quotas can sell them to demanders in the carbon market.

Overview of the Carbon Trading Market in 2025

Carbon pricing mainly includes two forms: carbon tax and carbon trading.

• Carbon tax: A tax levied by the government on unit emissions.
• Carbon trading: Establish a carbon market to allow the buying and selling of carbon emission allowances.

The current carbon emission price is affected by multiple factors:

1. Carbon Emission Cap
2. Economic Factors
3. Market Supply and Demand Relationship
4. Technological advancements, energy structure, etc.

According to the latest data, the scale of major global carbon trading markets continues to expand, with the trading volume expected to exceed $100 billion by 2025. The European Union Emissions Trading System (EU ETS) remains the largest carbon market in the world, while China's national carbon market is developing rapidly, becoming the second-largest carbon trading market.

Carbon Credit Investment Strategy Analysis

stock investment

Buy stocks of companies related to carbon trading platforms, environmental technology, clean energy, etc. The outstanding carbon credit concept stocks in 2025 include:

• Afforestation Carbon Rights Stocks: Huazhi, Yongfengyu, etc.
• Carbon capture technology stocks: Taiwan Cement, Donglian, etc.
• Green energy stocks: Yuanjing, Dacheng Steel, etc.
• Carbon Inventory Stocks: Zhi Tong, Rui Yang, etc.

Carbon Credit Fund

Purchase shares of funds focused on the carbon credit trading market. Several major asset management companies have launched carbon-themed ETFs, providing investors with diversified exposure to the carbon market.

Directly participate in the trading platform

Open an account on a carbon trading platform to buy and sell carbon credits directly. Currently, some mainstream CEX platforms have begun to offer carbon credit derivatives trading services, providing convenient ways for investors to participate in the carbon market.

Carbon Credit Concept Stock Selection Strategy

Investors can analyze carbon credit concept stocks from the following perspectives:

1. Carbon Emissions and Carbon Quotas
2. Carbon Neutrality Goals and Carbon Reduction Measures
3. Financial condition and valuation level
4. Technical Analysis
5. Track carbon credit-related index ETFs

The Impact of Carbon Trading on the Stock Market

• The fluctuation of carbon trading prices directly affects the performance of related stocks.
• Carbon trading provides new sources of revenue for enterprises and helps to diversify risks.
• The carbon market scale and liquidity are still developing, with significant price volatility.
• Policy changes may bring legal risks

Investment Risks and Opportunities Coexist

Earning Potential:

• Benefit from the global carbon reduction trend
• Increase corporate revenue and profits
• Increase market attention

Potential Risks:

• Uncertain factors such as policies and technology
• Market sentiment fluctuations
• Risk of stock price bubble

Investors should comprehensively consider risk and return, and implement effective risk management. While seizing investment opportunities in carbon credits, it is essential to fully understand the characteristics of carbon credit trading and carefully evaluate investment decisions.