Carbon Credits

In essence, a carbon credit is a market-based tool that a) generates revenue for climate solutions developed by the credit sellers and b) offsets the unabated emissions released by the credit buyers

How Carbon Credits work

Project Developers

NGOs or other entities develop carbon credit projects, eg. plantation of millions of trees in Latin America or creation of landfill gas capture facilities or implementation of Direct Air Capture technologies etc

Certifiers / Standards

Certifying organizations, known as Standards,

• certify, via 3rd party validators/verifiers, that the projects are real and in compliance with the Standard’s methodology,

• issue carbon credits and list them on their registry

Marketplaces

Carbon credits are traded in specialized platforms or they are sold by the certifying organization and project developers directly

Brokers

Brokers have a deep knowledge of the market, connect buyers and sellers of carbon credits and, if requested, place transaction orders on behalf of clients in marketplaces

End Buyers

Companies buy and retire carbon credits from the market to offset their emissions; all retirements are counted once and are registered in the pertinent registries; subsequently, buyers receive their offset certificates

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Key criteria for high quality carbon credits

(based on a sub-list of ICVCM’s Core Carbon Principles)

Additionality

The GHG emission reductions or removals from the mitigation activity shall be additional, i.e., they would not have occurred in the absence of the incentive created by carbon credit revenues.

Also, the pertinent mitigation activity shall not be considered common practice in the region it is developed.

Permanence

The GHG emission reductions or removals from the mitigation activity shall be permanent or, where there is a risk of reversal, there shall be measures in place to address those risks and compensate for reversals.

Quantification

The GHG emission reductions or removals from the mitigation activity shall be robustly quantified, based on conservative approaches, completeness and sound scientific methods.

Independent Verification

Mitigation activities shall be validated and verified by independent third-parties.

No double counting

The GHG emission reductions or removals from the mitigation activity shall not be double counted, i.e., they shall only be counted once towards achieving mitigation targets or goals.

Transparency

The information on mitigation activities shall be publicly available in electronic format and shall be accessible to non-specialised audiences to enable scrutiny.