It’s no secret that organizations, businesses and NPOs can effectively lower their own carbon footprints with some simple steps like increasing energy efficiency, optimizing their logistics or simply auditing and adjusting their behaviors to reduce their carbon impacts.
While the compliance markets are regulated by mandatory national, regional or international carbon reduction organizations, the voluntary market has four major standards in place, each with its own slightly different focus.
These carbon standards, while crucial to ensuring that carbon offsets are actually reducing carbon emissions and not just claiming to, are one component of the voluntary carbon market.
Projects are often created through entrepreneurial activities that are the result of a passion for improving lives for people in a specific geography with alternative livelihoods or improvements in health and welfare.
The carbon crediting programs, or carbon standards, mentioned above have created strict protocols created through a peer-reviewed process that the project must meet prior to credit issuance.
In some cases, brokers may make an investment in credits ahead of issuance that can affect the transparency of pricing or affect the impartiality of the broker to judge whether the credits are of high quality or not.
With the recent growth in the voluntary market, some buyers are turning to exchanges as a place to procure large volumes of credits with listed prices.
In the voluntary market, it is essential to remember that buyers are acting voluntarily to use carbon credits to reduce emissions they have created; there is no government requirement for them to do so.
The concept behind carbon credits is that as the price rises, it puts increasing pressure on companies to make permanent reductions so there is no longer a need to purchase them outside.
With proper due diligence and an understanding of how the project is delivering climate benefits, carbon credits are a measurable solution that businesses and NPOs can turn to in order to mitigate the effects of climate change.