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Carbon Credits

Carbon credits are used in carbon markets to encourage businesses and governments to reduce or offset their carbon emissions. Quality carbon credits are not a mysterious figure but a representation of measurable positive environmental impact.

What are carbon credits?

Carbon credits are tradable permits that represent reducing or removing carbon dioxide (CO2) and carbon dioxide equivalent (CO2e) emissions from the atmosphere.

A carbon credit represents one metric tonne of CO2 or CO2e, such as methane or nitrous oxide, that has been prevented from being emitted into or removed from the atmosphere.

High-quality carbon credits are usually generated by nature-based projects that reduce carbon emissions or activities that prevent CO2 emissions from reaching the atmosphere. These projects include planting trees and restoring degraded land through reforestation or providing better alternatives for household items, such as energy-efficient cookstoves. 

Organisations that need to offset their carbon emissions can purchase carbon credits from these projects or activities to help offset their emissions. It provides opportunities for effectively funding the development of nature-based solutions and helps to reduce carbon emissions.

Carbon credits are generated through activities or projects that reduce or remove carbon emissions from the atmosphere.

For example, a reforestation or nature-restoration project that plants trees or protects existing forests can receive carbon credits for the CO2 removed from the atmosphere by trees that absorb carbon during photosynthesis.

Similarly, a renewable energy project, such as a wind farm or solar power plant, generates electricity without producing carbon emissions. The project developer can then receive carbon credits for the avoided emissions using renewable energy instead of fossil fuels.

To generate quality carbon credits, these projects must be approved and verified by an independent third-party organisation that ensures the project meets specific standards and criteria.

There are several types of carbon credits, which can be classified based on the type of project that generates them or the standard used to certify them. Here are some examples:

  • Forestry credits: These credits are generated by afforestation, reforestation, or avoided deforestation projects. Forests absorb and store atmospheric CO2, making them a key tool in mitigating changing environmental conditions.

  • Verified Carbon Standard (VCS) credits: These credits are certified under the Verified Carbon Standard, a widely recognised and respected standard for carbon offsets. VCS credits are generated by various projects, such as renewable energy, forestry, and energy efficiency.

  • Gold Standard (GS) credits: These credits are certified under the Gold Standard, which is a standard that requires high levels of environmental and social sustainability in addition to carbon reduction. GS credits are generated by renewable energy, energy efficiency, sustainable agriculture, and forestry projects.

  • Carbon Capture and Storage (CCS) credits: These credits are generated by projects that capture CO2 emissions from industrial processes or power generation and store them underground or in other long-term storage facilities.

  • Renewable Energy credits (RECs): These are carbon credits generated by renewable energy projects, such as wind, solar, hydro, or biomass. The carbon emissions avoided by generating electricity from renewable sources can be translated into carbon credits.

  • Energy Efficiency credits: These credits are generated by projects reducing energy consumption and promoting energy efficiency. Examples include building retrofits, lighting upgrades, and installation of more efficient heating and cooling systems.

These are just a few examples of the carbon credits types. Each type of credit has unique characteristics and can play an important role in reducing carbon emissions and promoting sustainable development.

Source DGB green earth

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