Carbon Credits Verified in the Carbon Credit Market
In an era where climate change is top of mind for many individuals and organizations, reducing greenhouse gas emissions is becoming more and more attractive. One way to do so is by participating in the carbon credit market – whether as an end-buyer or a project producer. However, the details of how a carbon credit is produced, verified and impactful can seem daunting for those unfamiliar with the industry. So, in this blog post we’ll dive into everything you need to know about the carbon credit market and how carbon credits are produced, verified and impact emissions.
The voluntary carbon market (VCM) allows companies to purchase carbon credits from VCM-certified projects to offset their emissions. This allows companies to meet their emission reduction targets despite limits set by regulators, known as caps, or to invest in low-carbon technologies that will ultimately reduce their emissions over time.
For a project to sell its carbon credit market in the VCM, it must meet a number of requirements. These include being measurable, additional and unique. Measurable means the project must be able to quantify its impact on emissions. Additional means the project must generate a net reduction in emissions that would not have taken place without the sale of its carbon credits. And, unique means each tonne of CO2e avoided or removed is counted only once – it cannot be double-counted in other ways.
How Are Carbon Credits Verified in the Carbon Credit Market?
To meet these standards, a project must go through the validation and verification process by an independent third-party organization accredited by the VCM. These organizations, called validation and verification bodies, play a critical role in the carbon credit market by ensuring that a project meets the necessary requirements. They also provide regular monitoring and review of a project’s performance.
Typically, projects are certified by an internationally recognized standard, such as the Verified Carbon Standard (VCS), Gold Standard, Clean Development Mechanism or Climate Action Reserve. These standards establish the accounting, project eligibility and monitoring, reporting and verification (MRV) requirements for carbon credit projects. After the VVB approves a project, it’s registered in a carbon credit registry where it can be sold in the VCM.
To verify a carbon credit, an accredited third party must conduct MRV over the course of a year. This includes measuring and recording the amount of greenhouse gases emitted or avoided by a project, tracking the resulting emissions reductions over time and submitting these findings to the VVB.
The VVB then evaluates these MRV reports and confirms the total emissions reductions. This is referred to as a ‘carbon audit’ and ensures that the MRV report has been completed and verified by an independent, accredited third-party. This is why carbon credits sold in the VCM are often more expensive than those in the compliance carbon market. However, many buyers believe the higher price is worth it to have the confidence that a carbon credit has been independently assessed.