Carbon credit procedures

A Carbon credit is a unit of measurement that represents the removal of one ton of carbon dioxide equivalent (tCO2eq) from the atmosphere[1]. Buying such credits enables a buyer to offset[2] their greenhouse gas (GHG) emissions[3], while enabling a seller to finance the changes needed to reduce GHG emissions.

The voluntary carbon market functions outside but in parallel with the compliance (i.e. mandatory) market. It operates not because of government obligations but because of Corporate Social Responsibility (CSR) and/or as a response to market pressure and public opinion. Therefore, in the voluntary market, the trading of Carbon Credits is not related to an allowance to emit but more to a voluntary action to support and promote a project which reduces global emissions. The voluntary trading schemes ultimately depend on parties (private or public) that want to reduce their carbon footprint, even though they are not required to. Such parties may want to reduce their net carbon emission by paying others to take carbon out of the air. The amount of carbon emissions saved is again measured as Carbon Credits.

Criteria for carbon credits

Generally, the following criteria need to be considered in the voluntary emission reductions programs/projects:

Additionality This means that a project would not have gone ahead in a ‘business as usual’ scenario and that any emissions reductions are ‘additional’. GHG emissions reduction from a project activity are quantified relative to baseline emissions for the project duration. Baseline GHG emissions are derived from the baseline scenario. The baseline scenario is a continuation of the current peatland condition category and hence a continuation of current GHG emissions (‘business as usual’).

Measurability Ensures that emission reductions achieved by a project can be quantified in a transparent and verifiable way. Baseline data based on pilot sites are required to measure the effects of carbon reduction and sequestration and thus deduce emission factors related to measurable indicators during the project. This evaluation should be conservativeness that meaning that emissions are underestimated in the baseline and overestimated in the project scenario. This helps to ensure that a project can provide near certainty that it will achieve its GHG emissions reductions targets.

Verifiability Requires that an independent third party must be able to verify the quantification of emissions reduction on the basis of previously defined criteria. Verification provides assurance to buyers of Carbon Credits.

Reliability Complete and reliable documentation is necessary not only to avoid double selling but also to create confidence in the market. For this reason, the trading of carbon credits must be documented indisputably in central registries. This register must provide an open and transparent record of all aspects of approved projects.

Sustainability Projects should not contribute to the deterioration of socioeconomic or environmental conditions. Moreover it has to avoid Leakage. The project must not lead to higher emissions being caused outside the project boundary. Projects must be designed to prevent this from happening.

Permanence When emissions reduction projects come to an end there is a risk that any carbon saved or captured will be emitted due to a possible lack of future funding. To avoid or reduce this risk, reversals must be prevented with long-term contracts or legal measures and effectively made permanent. The VCS standard now limits ‘permanence’ to 100 years. The duration refers to the timespan of a peatland rewetting project. Commonly this is 50 years.

Co-benefits Carbon projects can also contribute to improved socioeconomic and environmental conditions. Co-benefits refers to gains other than emissions reduction derived from rewetting peatlands. These can include, improved water quality, flood prevention, groundwater enrichment, evaporative cooling and increased more typical biodiversity.

Authors: Valentina Sechi & Jasper van Belle