Overview

Carbon credits available in Carbon Markets are quantified in metric tonnes, with each tonne signifying the reduction or elimination of one metric tonne of carbon dioxide from the Earth's atmosphere.

The project's origin significantly influences several aspects, including the market value of carbon credits, their broader effects on communities and the environment, as well as the time and expenses needed for credit generation. Another crucial distinction among projects lies in whether the credits originate from emission avoidance initiatives or direct carbon removal efforts. Every validated project undergoes rigorous evaluation against comprehensive bottom-up Measurement, Reporting, and Verification criteria by independent third-party validation/verification bodies. These projects must demonstrate their ability to meet essential criteria such as:

• Permanence: The project must ensure that the carbon avoided or removed remains achievable into the future, possibly throughout the operational lifetime of a renewable energy project, without being compromised by leakage, meaning the project doesn't cause emissions elsewhere within its boundaries.

• Emissions reductions: The project must demonstrate its capacity to achieve carbon reductions beyond the existing emissions baseline in its locality.

• Monitoring and reporting: Ongoing monitoring and reporting are essential to showcase the sustained impact and permanence of the project's emissions reductions.

• Additionality: The project must prove that the carbon finance obtained through the issuance of carbon credits is crucial for its development and that it wouldn't be economically viable without this financial support.

• Double-counting: The project should not receive credits in other emissions trading schemes, preventing double-counting.

• Sustainability: The project should not negatively impact sustainable development within the local community.

Several key attributes of carbon credits are crucial for distinguishing between different project types in the market:

• Carbon standards: Approved projects receive accreditation from nonprofit certifiers like Verra, Gold Standard, American Carbon Registry, and Climate Action Reserve.

• Country: Some countries may have the expertise, supply chains, and infrastructure for certain projects over others, and project costs can vary depending on the country.

• Project type: Each credit is generated using a distinct technique or technology for carbon avoidance or removal, including reforestation, afforestation, forest protection, renewable energy (solar, wind, hydro), soil carbon, Direct Air Capture (DAC), or Carbon Capture and Storage (CCS).

• Co-benefits: Projects may attain additional certification from standards like the Climate, Community, and Biodiversity Standards (CCB Standards), which acknowledge extra benefits such as positive local impacts on communities and biodiversity that the project delivers.