Qualifies For Carbon Credits
Carbon credits are an environmentally conscious way to reduce greenhouse gas emissions. They are issued by companies or other entities, and may be purchased or traded. Companies who use carbon credits in their operations have a better chance of meeting their emission reduction goals than those who do not. However, these projects will not completely solve the climate change problem.
A carbon credit exchange is an equivalent of one metric ton of greenhouse gases (GHG) removed from the atmosphere. The number of credits associated with a project may vary, depending on the level of compliance and other factors. This could mean an increase in the price of the credits, or a decrease. But it is important to keep in mind that the cost of carbon credits depends on the supply and demand of the economy.
There are two main categories of carbon projects: removal and avoidance. Generally, the removal category includes projects that capture GHGs from the atmosphere or store them underground. Among these are reforestation, afforestation, and wetland management. Another category, avoidance, involves projects that reduce the volume of GHGs in the atmosphere. Examples include solar farms, wind turbines, cookstoves, and forestry emissions reduction.
What Qualifies For Carbon Credits?
A small-scale community-based project is often locally-oriented and produces more co-benefits than industrial projects. These projects usually trade at a premium to industrial projects, but can be more expensive to certify.
The best way to understand carbon offsets is to take a look at what qualifies them. Each credit has its own identifier or serial number. Some companies use a system called a “price floor,” where the price is capped at a certain dollar amount. For example, a company that pays farmers a fee for planting cover crops might require a minimum number of credits per acre.
In addition, a carbon offset project must deliver additional social and environmental benefits, or “co-benefits,” in order to be considered a bona fide carbon mitigation mechanism. Typically, a community-based project is localized and involves local groups, whereas industrial projects are larger-scale and often involve a third-party verification service.
It is also important to consider the long-term implications of selling or renting out a piece of land. A landowner who changes hands during the life of a contract could be subject to a penalty. If you are a farmer, you might want to wait to sell or lease your land until the carbon marketplace is more developed.
One of the cheapest ways to produce a carbon offset is to lease your farm from a local government, agricultural organization, or environmental group. Many of these organizations have a special arm that specializes in generating the relevant carbon projects.
When choosing a carbon project, it is also a good idea to consider which standard to go with. You should choose the most credible one available. Often, a certified project will have a higher quality, resulting in a more reliable carbon offset.
While a carbon project might not be able to solve the climate change problem on its own, it is a major contributor to the flattening of the carbon curve.