Investors will pump an estimated $4.5bn into the market for carbon credits this year, but the risk profile of the sector is growing fast, experts have warned, write Emma Saunders and Fiona Harvey .

Arne Eik, senior analyst at Point Carbon, the carbon analysts, said only about 70-80 per cent of expected credits were materialising, as the construction of green energy projects in emerging nations falls through.

”Lots of hedge fund cash is chasing after the same projects,” said Garth Edward, head of emissions trading at Citigroup. ”The price gets pushed up. Yet some of these projects have no project development team and no consultants.”

There is also evidence of a narrowing of price between pre-construction and post-construction carbon credits, which investors arbitrage.

Henrik Hasselknippe, of Point Carbon, said the UN’s closer scrutiny of some carbon projects would mean delays to the supply of credits. ”Some developers could see cash flow problems,” he said.