What is a carbon credit?

In the last 5 years, you’ve probably encountered the term ‘carbon credit’ with increasing frequency. As the climate crisis deepens in severity and the planet reaches its tipping point, carbon credits have emerged as an important factor in mitigating global warming and the degradation of the environment as a whole.

So, what exactly is a carbon credit?

Essentially, a carbon credit is a type of permit that represents 1 tonne of carbon dioxide removed from the atmosphere. They are oftentimes purchased by companies (although some project developers do offer individuals the option to compensate their footprint) seeking to offset the carbon dioxide emitted through their industrial practices. These credits represent certifiable and measurable emissions reductions, while also oftentimes contributing a host of benefits to the environment and communities involved.

These credits can be generated through a number of projects and solutions, all either reducing, avoiding, destroying or capturing emissions. These can range from reforestation projects to wind farms and all the way to direct carbon capture. As you can see, some projects are based on natural processes and systems, while others focus on a more technological approach to reducing the amount of carbon dioxide in the air.

These approaches can also be split into carbon removal and carbon avoidance projects. Carbon removal projects, as suggested, extract carbon dioxide from the atmosphere. This can include nature-based solutions (i.e. tree-planting) and innovative technical solutions (i.e. enhanced mineralization). On the other hand, carbon avoidance projects prevent the release of carbon dioxide into the atmosphere. This can mean the implementation of REDD+ projects that reduce deforestation and forest loss, investing in renewable energies that prevent the combustion of fossil fuels, and even implementing energy efficiencies that reduce energy consumption. Both types of projects are vital to limiting the concentration of greenhouse gases in the atmosphere.

It is important to note that there exists two carbon markets in which carbon credits can be used - the compliance (or involuntary) market and the voluntary market. The former depends on government ‘caps’ on the amount of emissions permitted by different sectors, while the latter is used by companies that want to ‘offset’ their emissions voluntarily in order to meet climate targets. We’ll learn more about the history of these markets and the important differences between them next week.

Here at The Green Branch, we develop nature-based carbon projects through the restoration and reforestation of degraded lands. Our projects prioritize building back diverse ecosystems while simultaneously emphasizing the revitalization of the local community. Our high-quality certified carbon credits are there to help companies who are on the journey to net zero.