Carbon Credits 101

What is a carbon credit?

A carbon credit is a unit of exchange that businesses, organizations and individuals can use to offset their greenhouse gas emissions. One carbon credit is equivalent to one metric ton of greenhouse gases removed from the atmosphere. A carbon credit and a carbon offset are synonymous terminology.

How do carbon credits work?

One carbon credit is a unique, independently verified reduction of greenhouse gases (GHGs) traceable back to the carbon project that generated the emission reduction. Carbon projects are:

  • Real – the project’s carbon reduction is measurable.
  • Additional – the value of reductions must be beyond “business as usual.”
  • Verified – An independent and qualified third party has conducted a detailed reviewed of all aspects of the carbon project, and attests to the emission reduction claim.
  • Registered – Carbon credits are unique, serialized, tracked and can be retired only once.
  • Permanent – The GHG removal, represented by carbon credits, is permanent and cannot be reversed. For forest projects, the project registrar provides a robust buffer system to account for any unforeseen reversals (forest fire, etc.).

What types of projects do carbon credits fund?

Carbon offset projects come is many forms and are located all over the world. Project types include forestry and other land use projects, emission reductions in industrial processes, methane capture and destruction from under regulated landfills, and through digesters located on dairy farms. Carbon capture and storage of emissions from fossil fuel combustion is another project type. Energy efficiency and renewable energy is a project type that is fast becoming business as usual. You can choose to purchase and retire credits from a single project, or buy credits in a portfolio that distributes your emission reduction funds across multiple projects.

Who’s buying carbon credits?

There are two flavors of carbon markets, the large worldwide compliance market and the smaller voluntary market. Under a GHG compliance program, companies that are large emitters are subject to government policy, which often allow the use of carbon offsets for a portion of a emission reduction commitment. The much smaller voluntary market allows individuals, small and medium size businesses, even large corporations not under a compliance program the ability to offset their emissions.

How do I know that a carbon credit is real? What are the standards used to verify carbon credits?

Carbon projects are governed by the GHG Registries.

  • Climate Action Reserve (CAR) –  A carbon offset registry for the U.S., Mexico and Canada.
  • VERRA – Verra registers carbon projects under a several different standards. The recognizable Verified Carbon Standard (VCS) is the largest carbon project registry for the worldwide voluntary carbon market. Other Verra standards ensure that carbon projects are also meeting human and ecological needs, such as the Climate Community and Biodiversity standard and the Sustainable Development Verified Impact Standard (SD VISta) ensures that the carbon projects are also meeting both human and ecological needs.
  • American Carbon Registry (ACR) – A carbon offset registry for the voluntary and California regulatory carbon markets.
  • Gold Standard Foundation (GSF) – A certification standard for offset projects located mostly in developing countries. Gold Standard projects have a high level of achievement of Sustainable Development Goals.
  • UN Clean Development Mechanism – The UN CDM is an international registry used by compliance markets around the world.

How can I calculate the emissions for my business or personal activities?

For every activity that involves GHG emissions there will be an emission factor associated with that activity. The combustion of a gallon of gasoline emits the equivalent of about 8.8 kg of CO2, or a little less then 1% of a metric ton of GHGs (<1 carbon credit).

EcoSoul is providing a limited set of carbon footprints for some typical activities. The US EPA provides a household carbon footprint calculator. For businesses, with more complicated operational patterns, qualified professionals will be involved in calculating an organizations emissions.

Cool! So will carbon credits single-handedly take down climate change?

Unfortunately not. Carbon credits are just one of many tools that are needed to help economies transition to a low carbon future. EcoSoul is excited to support the growth of small businesses and green jobs while helping the carbon offset industry move forward.