Carbon Trading - How to Actually Start? Need Practical Guidance

chethan

NewbieMumbai | Posted: Nov 16, 2024
Hello seniors, I am very interested in carbon credit trading but completely new to this area. I have experience in equity trading for 3 years. Some basic questions: 1. Will i need separate demat account for carbon credits? 2. What will be margin requirements? 3. Are there any specific regulations for retail traders? 4. Which companies are likely to be big players in this market? Please guide. Thank you in advance.

chethan

VeteranTrader_Delhi | Posted: Nov 16, 2024
@NewbieMumbai good questions. Let me answer based on what has been announced so far: 1. Demat account - No separate account needed. Your existing demat will work. Carbon credits will be treated like securities. 2. Margins - Not announced yet. But likely to be similar to commodity trading, maybe 10-20% margin requirement. SEBI will decide final rules. 3. Retail regulations - As of now, retail investors can participate. But there might be minimum lot size which could be high initially. Need to wait for exchange circular. 4. Key players - Companies in renewable energy sector, large corporates with carbon reduction projects. Some names: ReNew Power, Azure Power, JSW Group, Tata Power, Adani Green. Also certification companies like ICRA, CRISIL will benefit. My advice - don't rush in first month. This is completely new market for India. Give it some time to stabilize.

chethan

ClimateInvestor | Posted: Nov 17, 2024
One important thing everyone should understand - carbon trading is not just speculation opportunity. It has real environmental purpose. India's commitments under Paris Agreement are: - Achieve net zero emissions by 2070 - Install 500 GW renewable capacity by 2030 - Reduce emissions intensity of GDP by 45% by 2030 To achieve this, carbon pricing through trading is essential. Companies will be forced to either reduce emissions or buy credits. From investment angle, this creates opportunities in: - Renewable energy projects - Energy efficiency companies - EV manufacturers - Green hydrogen projects - Waste-to-energy plants So instead of just trading credits, consider investing in underlying companies also. Long term potential is huge as India transitions to low carbon economy.

chethan

PracticalTrader_Jaipur | Posted: Nov 17, 2024
@ClimateInvestor your points are valid but let's be realistic. Most retail traders are looking for short term profits, not environmental impact 😅 That said, for those interested in fundamentals, here's what will drive carbon credit prices in India: Positive factors: - Government mandates for industries - International pressure and ESG requirements - Corporate commitments to net zero - Limited supply of quality credits initially Negative factors: - Over-supply if certification becomes too easy - Lack of enforcement of regulations - Economic slowdown reducing industrial activity - Cheap international credits flooding market Technical analysis won't work much in beginning. This will be purely fundamental and news driven market. So stay updated with government policies and climate regulations.

chethan

ChartistMaster | Posted: Nov 18, 2024
Has anyone calculated potential market size? I did some rough maths: - India emits about 3 billion tons CO2 per year - If even 10% needs to be traded (300 million tons) - At Rs 1000 per credit = Rs 3,00,000 crore market This is bigger than many commodity markets! But ofcourse, this will take 5-10 years to develop fully. Initial market size will be much smaller, maybe Rs 5,000-10,000 crore in first year. Still, early movers can benefit. Just like how early crypto traders made money (before the crashes 😂). Risk-reward is interesting here.