Trade Carbon Credits
In the world of climate change, trading carbon credits is one way that companies and organizations can meet ambitious goals for reducing greenhouse gas emissions. It is also a tool for supporting the Paris Agreement, which calls for limiting global temperature rise to 1.5 degrees Celsius above preindustrial levels by the year 2100.
Cap-and-trade programs are regulated by governments, which set caps on how much CO2 companies can emit. Those companies that exceed their limits can sell trade carbon credits to companies that have fewer emissions, making up for the extra CO2 they released.
If your company is compliant with a cap-and-trade program, it’s probably because you are committed to lowering your emissions and you have an outlined plan for doing so. If you’re not, it’s because your management team may be unable to keep your emissions low enough. You can offset your emissions in a variety of ways, including through renewable energy, energy efficiency, and conservation projects. These can range in scale from small, local initiatives to large, global initiatives that have a significant impact.
Who Gives Trade Carbon Credits?
However, the size and scope of your climate change action plan will determine how much carbon you can reduce without buying carbon credits. If you’re a large, industrial-scale organization with limited resources, you might not be able to reduce your emissions on your own, so you might have to buy carbon credits to support your efforts.
Depending on where you live, there are several different types of markets for purchasing and selling carbon credits. They range in size and scope, but most have a similar core goal.
Voluntary markets are a growing part of the climate change ecosystem, but they face challenges such as a lack of transparency and fraud. A voluntary market that is well-functioning can help companies find and complete carbon offset transactions, thereby reducing the amount of money spent on carbon emissions.
A verified carbon credit is one that has undergone a rigorous process to prove its environmental impact. This is a key factor in whether buyers are willing to pay the price for a carbon offset. Using careful data and analysis, a third party can verify that a project has met the criteria of the verification standard.
The standard varies, but it usually requires that projects have measurable and independently verified reductions and that their impacts are unique and permanent. Additionally, the standards can vary by the type of project and its level of ambition. For example, some projects are designed to protect rainforests. These need to be REDD+-certified, meaning that they have a clear land use strategy and limit the number of trees that are cut.
Another project could be a clean cooking initiative that would produce carbon credits based on the energy it uses. These credits would be backed by a guarantee that the project’s carbon footprint will be less than the equivalent of a metric ton of coal burned.
