7 Characteristics of a Carbon Credit

While carbon offsets may seem like a relatively simple concept to grasp, there are many factors that go into determining whether or not an offset is high-quality or not. When choosing which carbon projects you wish to support, it is important to take note of these qualities so you can guarantee that the credits you buy are truly having the greatest possible impact. Below are the 7 key characteristics of a carbon credit:

Additionality Did the CO2 reduction also occur in the absence of the carbon credits? In essence, additionality means that the project would not have happened without carbon credit revenue - the offsetter is directly responsible for enabling the offsetting action to take place.

Reliability Is the project based on clear and measurable objectives that have been verified by third party bodies? This is especially prevalent with projects that are based on unrealistic and often intentionally inflated or exaggerated baselines, resulting in overestimating the project's climate impact and hence taking credit for what would have happened, not what actually is happening.

Permanence What does the longevity and durability of the project look like? Instead of focusing on offsetting, removal projects extract carbon from the atmosphere into long-term storage, permanently or almost permanently removing it. A standard convention is that carbon only needs to be kept out of the atmosphere for 100 years to be considered “permanent”.

Single Issuance / Double Counting This refers to when two parties claim the same carbon removal or emission reduction from the same project but only one of the parties emissions is counterbalanced. Carbon credits must convey an exclusive claim to the CO2 reduction or removal.

Preventing and accounting for Leakage Carbon projects must ensure that their activities remove/avoid and do not simply displace carbon dioxide emissions. This can be prevented by quantifying, managing, and accounting for any displacements that may occur during implementation.

Net positive social, biodiversity, and economic impact This is based on the no harm principle: the project creates positive social and economic impacts for the local community and environment.

Diversification This refers to offsetting being based on a portfolio of diverse climate projects (ranging from reforestation to innovative carbon capture methods). A diverse portfolio is key to maximizing climate impact while mitigating risk.

Always make sure to do your research before buying any kind of carbon credit. By being aware of these 7 key characteristics, you can help guarantee that the credits you purchase are legitimate and credible.