Carbon Credits

What are Carbon Credits

Carbon credits are typically allowances obtained from governments to allow a specified amount of emissions by companies operating in their jurisdiction in various sectors. Each credit allows companies to generate one ton of CO2 emissions. Companies with excess credits can sell them to other firms that are generating more CO2 emissions than they have allowance to.

Carbon Offsets monetizes the removal of CO2 as part of operations and allows for firms to sell this removal activity in the same 1-ton increments between companies. The purchase that carbon offset allows the purchasing company to reduce their own carbon footprint.These offsets are typically generated in Reduction/Avoidance projects; such as renewable energy and methane capture, or Removal/ Sequestration projects; Reforestation and Direct Carbon Capture.

How are Carbon Credits Traded

Carbon Credits are traded through cap-and-trade programs such as the California or European ETS markets. The Voluntary market allows companies to register projects and define the output following various standards organizations; for example, the Verra VCS or the Gold Standard.

The Voluntary market allows companies to take proactive steps to meet their Environmental & Sustainability goals. It also can be used to provide funding and promote beneficial societal projects in developing countries.

A key aspect of standards-based projects focused on the voluntary Carbon market is the concept of additionality. These means that the reduction in CO2 must be a result of activities that aren’t part of the existing environment and wouldn’t be able to go forward without additional funding to proceed.

How We Can Assist

For our clients, we work with them to navigate the various standards-based approaches to evaluate if their new and unique process or proposed projects would qualify under the regulated or voluntary carbon markets and how to optimize their projects for the best results.