November 18, 2021
What Are High-Quality Carbon Credits?
The race for carbon neutrality is on. The Intergovernmental Panel on Climate Change (IPCC) has determined that we have until 2030 to cut our greenhouse gas emissions in half—and that just gets us a 50% chance of avoiding the worst effects of climate change. By 2050, our global civilization will need to reach net zero.
That’s not a lot of time to change how we do things, especially considering worldwide population growth. The fact that developing countries also want to enjoy the advantages of industrialization that first world countries have had for over a century creates added pressure.
There will need to be a lot of investment in new technology, major overhauls of our infrastructure, and changes to how almost every industry works. For many organizations, the only way to balance the scales in the short term is to purchase carbon credits.
What Are Carbon Credits?
Carbon credits, or carbon offset credits, are simply an investment in a project that removes or prevents the emission of greenhouse gases (GHGs). One credit is the equivalent of one metric ton of carbon dioxide. With well-run projects, each credit has a unique number that is tracked in a database.
While there are many greenhouse gases, the common denominator for measuring GHG emissions and their removal is one metric ton of carbon dioxide, written as Mt CO2 eq or sometimes as C02e. For example, a project may reduce or prevent methane emissions. Methane is a 25x more potent greenhouse gas than carbon dioxide, so the impact of removing one metric ton of methane would be 25 Mt CO2 eq or C02e.
Carbon credits are recognized by some governments that have legislated cap-and-trade programs, like the EU or California. In these programs, organizations are held to strict emissions targets, and if they exceed these targets, they must purchase offset credits to ensure that the excess emissions are removed from the atmosphere in other ways.
You can learn more about the history and operation of carbon markets here.
How Can I Be Sure That My Carbon Credits Are Real and Are Working?
For anyone responsible for due diligence on carbon offset credits the question becomes: how do I know that the project credits I’m purchasing are really preventing GHG emissions or removing GHGs from the atmosphere?
This is where the term “high-quality carbon credits” comes from. It’s not a commonly used term, but there are some organizations that want to ensure that their projects are unassailable, given that some projects (especially in the early 2000s) faced criticism from academics, environmentalists, and other observers.
Several organizations have released standards for the evaluation of carbon credits.
- GHG Management Institute (GHGMI)/Stockholm Environment Institute
- Gold Standard
- World Wildlife Fund/Environmental Defense Fund (EDF)/Oeko-Institute
Each of these organizations have their own list of criteria, but the following criteria occur in multiple lists. Depending on what program(s) your organization is participating in, you will want to use the standards they accept. The following criteria provide a good starting point for understanding the difference between high-quality carbon credits and carbon credits that may present more risk.
Additional
Additionality means that the GHG removal would not have happened without the purchase of the carbon credits.
For example, if an organization sets up a solar array and decides to try and recoup costs after the fact by selling carbon credits, then the project would not be considered additional.
A credit would be considered additional if the funds directly go into new work, for example, if each credit provided a high-efficiency cookstove to a third-world family so they would not need to cut down as many trees for firewood.
Permanent
The greenhouse gas must be either permanently removed or permanently prevented from entering the atmosphere.
One example of permanent removal is the destruction of refrigerant gases in a carefully monitored incinerator.
Some carbon sequestration projects would not be considered permanent if the carbon dioxide or other GHGs escape back into the atmosphere. An example would be potential or actual leaks from a project to pump carbon dioxide gas deep underground.
Some reforestation projects would not be considered permanent if there was a strong likelihood of the trees being logged (legally or illegally) or if they were destroyed by insects or a forest fire. This vulnerability is unfortunate, because reforestation is one of the most cost-effective ways to remove carbon dioxide from the air. Forests also create important habitat for wildlife and protect watersheds.
Accurately Measured
The impact of the project on greenhouse gases has to be properly measured. Common problems with measuring the amount of greenhouse gases addressed by a project include overestimation of the effectiveness of removal technology, failure to take accurate baselines, and for some projects, simple leakage.
In some cases, projects can be accidentally double counted.
Independently Verified
To help ensure that carbon credits avoid these and other pitfalls, there are several independent third-party organizations who can evaluate plans and ensure they are carried out as designed, including Verra’s Verified Carbon Standard.
Not All Carbon Credits Are Created Equal
With organizations of all sizes anxious to do their part to fight climate change, the pressure has never been higher to ensure that carbon capture and avoidance projects are bona fide.
While “high-quality carbon credits” is not a common term, it is a term that some oversight organizations are using to address the problem of making sure that carbon credits actually represent the destruction or prevention of greenhouse gas emissions.
Requis now offers high-quality carbon credits on the platform. Organizations from EPC firms and operators to suppliers can embed their carbon neutrality goals directly into their sourcing and procurement processes at both the project and corporate level.
In deciding what kinds of carbon credits to offer on the platform, we’ve been incredibly rigorous and applied the highest of standards. Because we’ve been so selective, we’re currently offering carbon credits from Tradewater.