WHAT ARE CARBON CREDITS?

A carbon credit is a tradeable unit repre­sen­ting the avoid­ance, reduc­tion or removal of one metric ton of CO₂e from the atmo­sphere. Orga­niza­tions and indi­vi­duals can use these credits to oset their green­house gas emis­sions, or excess credits can be sold on veri­fied crediting plat­forms, crea­ting an extra revenue stream.

 

WHAT’S THE DIFFERENCE?

While often used inter­ch­an­ge­ably, carbon offsets and carbon credits operate on different processes and activities:

Carbon Offsets are an avoid­ance or preven­tion acti­vity invol­ving a reduc­tion of CO₂ or other green­house gas emis­sions from the atmo­sphere in order to compen­sate for emis­sions made else­where. Some examples are solar and wind power.

Carbon Credits are a removal acti­vity invol­ving a removal of CO₂ or other green­house gas emis­sions from the atmo­sphere. Some examples are refo­re­sta­tion and biochar produc­tion. Compa­nies or indi­vi­duals who earn carbon credits can sell them to other orga­niza­tions as carbon
osets to help oset their carbon footprint.

 

HOW DO CARBON CREDITS WORK?

Each carbon credit is treated as a unique and inde­pendently veri­fied reduc­tion of green­house gasses that must be traceable back to the specific carbon project that gene­rated the emis­sion reduction.

To qualify, the carbon project must be:

1. ADDI­TIONAL
The value of reduc­tions must be beyond usual busi­ness practices.

2. REAL
Carbon reduc­tion is measurable.

3. PERMA­NENT
The green­house gas removal is perma­nent and cannot be reversed.

4. REGIS­TERED
Each carbon credit is a unique, seria­lized and tracked unit that can be retired only once.

5. VERI­FIED
An inde­pen­dent and quali­fied third party conducts a review of the project and certi­fies the emis­sion reduc­tion claim

 

WHAT PROJECTS QUALIFY FOR CARBON CREDITS?

Carbon offset and removal projects come in many forms and acti­vi­ties located all over the world, including:

• Carbon and methane capture and sequestration
• Emis­sion reduc­tions in indus­trial processes
• Land use and reforestation
• Retur­ning biomass to the soil
• Inves­ting in rene­wable energy
• Impro­ving energy eciency
• Swit­ching to alter­na­tive fuel types

WHAT ORGA­NIZA­TIONS VERIFY CARBON CREDITS?

Quali­fying carbon projects are governed and veri­fied by inde­pen­dent GHG Regis­tries, such as:

https://acrcarbon.org/
https://verra.org/
https://www.goldstandard.org/
https://www.climateactionreserve.org/
https://puro.earth/
https://www.carbonfuture.earth/
https://unfccc.int/

WHO’S BUYING AND SELLING CARBON CREDITS?

Carbon market allows inves­tors and corpo­ra­tions to trade both Carbon Credits and carbon offsets simultaneously.

There are curr­ently two different carbon markets:

World­wide compli­ance market
Compa­nies that are large emit­ters of green­house gasses and are subject to govern­ment regu­la­tions. They are allowed to use carbon offsets for a portion of an emis­sion reduc­tion commitment.

Volun­tary carbon market (VCM)
Allows indi­vi­duals and compa­nies not under a compli­ance program the oppor­tu­nity to sell carbon credits to earn revenue or buy carbon credits to oset their emissions.

 

CARBON CREDIT / OFFSET LIFECYCLE

1. PROJECT DEVE­LO­P­MENT, VALI­DA­TION & REGISTRATION

• Offset project is desi­gned by a project deve­loper, financed, then reviewed by an inde­pen­dent auditor
• Audit paper­work is sent to a stan­dards committee, which certi­fies the project if stan­dards are met
• Project is valued in terms of GHG reduc­tion poten­tial and co-bene­fits provided

2. CARBON OFFSET ISSUANCES

• Project is veri­fied annually
• Carbon oset credits are issued based on veri­fied quan­tity of CO2e GHG reductions

3. CARBON OFFSET TRADING / SALES

• Once issued, offsets can be trans­ferred and traded between third-parties
• Purchaser does not neces­s­a­rily use the offset
• Offsets can be traded several times

4. CARBON OFFSET RETIREMENT

• Offset holders must retire the offset in order to use them and claim the asso­ciated GHG reduction
• An offset can only be retired once

WHAT ARE BIOCHAR CARBON CREDITS?

Biochar carbon credits repre­sent a perma­nent sequestra­tion (removal) of carbon from the atmo­sphere. Physi­cally trap­ping carbon in a stable
form (carbon sink) provides a longer and stronger perma­nence and higher value than tradi­tional avoid­ance or reduc­tion acti­vi­ties. When it comes to asses­sing and valuing carbon credits earned from biochar produc­tion and sequestra­tion, it’s essen­tial to work with industry-reco­gnized orga­niza­tions to ensure that the carbon removal is measurable, repor­table, and verifiable.