Carbon credits are transferable instruments representing greenhouse gas (GHG) emissions that have been reduced, avoided or removed through projects that are verified according to recognized quality standards.

Their purpose is to contribute to climate action and to help companies offset their hard-to-abate emissions.

1 carbon credit equals 1 tonne of CO2 reduced or removed.

 

 

 

How Carbon Credits work

➊ Project Developers

NGOs or other entities develop carbon credit projects, eg. plantation of thousands of trees in Latin America or creation of landfill gas capture facilities or implementation of new carbon sequestration technologies etc

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➋ Certifiers / Standards

Certifying organizations, known as Standards,
• certify (via 3rd party verifiers) that the projects are real and in compliance with the Standard’s methodology,
• issue carbon credits and list them on their registry

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➌ Marketplaces

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

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➍ 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

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➎  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

 

 

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 should 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.