What are carbon credits?
Nations that participated in the Kyoto Protocol had targets set to cap allowable emissions over an agreed period. Any nation that was able to stay below their targets was allowed to sell these "spare" emissions, or "credits", to other nations that were unable to meet their targets. Each credit was basically permission to emit one ton of carbon dioxide or an equivalent amount of any other greenhouse gas.
Carbon credits are no longer only used by nations under the Kyoto Protocol. Nations, corporations, and even individuals are now able to create, trade, and utilize carbon credits through independent third parties verifiers such as Verra, Gold Standard, and CDM and the voluntary carbon market is expected to reach more than $10 billion by 2030.
Why use carbon credits?
While the world is becoming more aware of the emissions that are created as a part of its daily activities, it is not always easy to curb them. By utilizing carbon credits, you can essentially pay another entity to emit less on your behalf so that you can continue to operate without reducing your emissions. The net benefit is still positive as there is still a net reduction in carbon emissions. At least this was the plan...
Not all carbon credits are created equal
There are three basic types of carbon credits:
Avoided emissions (refraining from cutting down forests)
Reduced emissions (typically energy efficiency measures)
Removed emissions (carbon capture and planting forests)
Credits from removed emissions is the easiest to understand. By removing the greenhouse gas from the atmosphere, there is less today than yesterday.
The other two are simple as well, but the actual impact to the emissions reduction target is sometime hard to quantify. Emissions reductions typically come from implementing energy efficiency measures or switching from fossil fuel based power generation to renewables. Unfortunately 100% renewable energy does not always result in zero carbon. For example, companies often use yearly consumption figures and offset them with purchased renewable power. If your purchased power is mostly solar, then your are probably purchasing power that is generated in excess with a low carbon footprint during the day, but using power generated with a higher carbon footprint at night. The action is still beneficial, but not nearly the zero carbon that it appears to be.
Avoided emissions come from refraining from an activity that would lead to carbon emissions. A good example of this would be protecting a forest scheduled from development and maintaining it for 50 years. The credits here come from avoiding the additional carbon that would not be absorbed by the forest if it were to be cut down. This type of carbon credit has proven difficult to verify and monitor, however the main issue is that these projects do nothing to reduce the CO2 levels to the levels that are required to meet the Paris targets. They only ensure that emissions do not increase.
How can GCT help?
GCT is specializing in the sourcing of carbon removal credits and the development carbon removal projects to help Japan meet its 2030 and 2050 CO2 reduction goals. Please click here to contact us and learn more.