Learning Materials

Investing in Australian Carbon Tokens

Learning Materials

Investing in Australian Carbon Tokens

What are carbon credits?

Carbon credits are a way for companies to offset their carbon emissions by purchasing credits from projects that have reduced or avoided carbon emissions. Carbon credits can be bought by investors who expect the price to rise over time and then sold to companies looking to offset their emissions. Carbon related investment is gaining interest from investors looking for new ways to diversify their portfolios.

What is the Australian Carbon Token (BCAU)?

BetaCarbon has created BCAU, which is a token notionally backed by Australian Carbon Credits. One BCAU represents 1kg of avoided or reduced carbon emissions. By holding BCAUs, investors can reduce supply and impact the price of carbon credits, making it more expensive for companies to pollute.

How did retail investors access the Australian carbon market before BCAU?

Before BetaCarbon, only wholesale investors could participate in the Australian carbon market. Wholesale investors could access the market by working through a broker or via over-the-counter (OTC) trading.

The carbon market had barriers to entry, including accounting requirements and high capital requirements, which made it difficult for retail investors and small businesses to participate.

What makes BCAU different from other tokens?

BCAU is based on a regulated carbon credit called the Australian Carbon Credit Unit (ACCU) and ACCUs are financial products administered by the Clean Energy Regulator. To earn ACCUs, a project must be registered with the regulator and follow an approved methodology. ACCUs have different values based on the quality of the carbon credit and BetaCarbon invests in a portfolio of ACCUs, which collectively inform the price of BCAU.

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