Carbon Finance

It can address market information asymmetry, guide carbon spot prices, and effectively mitigate trading risks.

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A carbon fund is a fund established to participate in emission reduction projects or carbon market investments. It can invest in CCER project development or participate in secondary market trading of carbon allowances and project emission reductions. Carbon fund management institutions are key investors in the carbon market, and the carbon fund itself is an important carbon financing tool.

After paying a certain deposit to the seller, the buyer acquires the right to sell or purchase a certain quantity of the underlying asset at a certain price within the agreed period or on the expiration date. If a company has a shortfall in allowances, it can buy call options in advance to lock in costs; if it has a surplus of allowances, it can buy put options in advance to lock in profits.

These are bonds issued by governments and businesses to raise funds for carbon reduction projects. They can also serve as a form of carbon asset securitization, namely, bond financing backed by carbon quotas and future income rights from emission reduction projects.

Debt financing secured by carbon assets such as carbon allowances or project emission reductions. The borrower pledges the valued carbon assets to a creditor, such as a bank or securities firm, to obtain financing at a certain discount. Upon maturity, the pledge is released by paying principal and interest.

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Converting traditional carbon credits (such as CCERs and VCS) into on-chain tokens enables standardized decomposition and efficient circulation of carbon assets.