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carbon credits

What do you need to know before buying carbon credits?

What are carbon credits?

Carbon credits are one of the three proposals that were included in the Kyoto Protocol. Their main goal is the reduction of emissions causing global warming. They were presented by Graciela Chichilnisky, an Argentine mathematical economist, in 1993. Carbon credits is a generic term for any tradable certificate that represents a quantity of GHG emissions reductions.

To better understand, a carbon credit is a type of allowance that represents one tonne of carbon dioxide removed from the atmosphere. According to the Environmental Defense Fund, it is the equivalent of a 2,400-mile drive in terms of carbon dioxide emissions. They can be purchased by individuals or more generally by companies to offset carbon emissions from industrial production, transport vehicles or travel.

One of the most efficient ways to remove carbon from the atmosphere is to plant trees. Thus, tree growth converts carbon dioxide into fixed carbon, which is stored in their trunks and roots. Additionally, carbon credits can be generated by taking steps to prevent carbon dioxide emissions in the first place.

There are two basic types of carbon credits:

  • Removed emissions:
    IFM, ARR.
  • Avoided emissions:
    Wind, Solar, REDD+, Hydro, Landfill, Energy Efficiency.

How are they generated?

Carbon credits come from projects around the world that remove greenhouse gases (GHGs) from the atmosphere or prevent their emissions. A carbon credit is created when a project certifies the reduction, avoidance or destruction of one ton of greenhouse gases. If one ton of greenhouse gases is emitted and one ton of emission reductions are financed or purchased, this will result in a net-zero carbon footprint.

Offset projects must undergo at least three rounds of review by regulators, from developing the methodology to specific project design and monitoring results. Once the methodology and project design of the offset project have been approved, it can be monitored for credit. External auditors will periodically evaluate the project, monitor the results. Based on the metric tons the project has reduced, how many credits will be awarded to the project can be identified. Climate protection projects were approved by reducing greenhouse gas emissions below a business-as-usual scenario. A project qualifies for carbon credits if it can quantify and repeatedly generate fewer greenhouse gases than current alternatives.

Nature-based climate solutions are not immediate solutions, but they are one of the few proven and truly sustainable negative emissions technologies.

At ALLCOT Trading, our mission is to promote additional sustainable impact with every transaction. If you want to achieve this in a fair, transparent and win-win scenario, contact us and together we will make it happen.


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