This general review paper explores the role of institutional investment in EU ETS. We do so by addressing seven questions sequentially, namely: (1) How does the EU ETS work? (2) What drives the value of carbon? (3) What potential diversification benefits arise from investing in carbon? (4) How does investing in carbon sit with investors’ fiduciary responsibilities? (5) How can institutional investors gain exposure to carbon? (6) What unconventional risks does investing in carbon entail? (7) What will happen to the carbon markets post-2012, once the Kyoto protocol expires?