Carbon credit refers to a tradeable permit that allows the company to emit a certain amount of carbon dioxide or an equivalent greenhouse gases. This permit allows them to emit one tonne of carbon dioxide or the equivalent amount of a different greenhouse gas.
If a company uses fewer credits than it has bought (read: produces less emission), it can trade and sell its credits to other parties who need it.
The Difference Between Carbon Credit and Carbon Offset
Then, what makes the carbon credit different from carbon offset? According to harmonyfuels.com, carbon credits stands for the right to emit that carbon, while the carbon offsets represent the production of a certain amount of sustainable energy to counterbalance the use of fossil fuels.
As stated in onetreeplanted.org, carbon offsets are also measured by tonne of CO2-equivalent, but different from the condition where a company emits less carbon than their limit, the carbon offsets are created when a business or a company decides to invest in something aims to reduce greenhouse gas emissions excluding their everyday operations.
In a nutshell, carbon offsetting is the act of cancelling out the CO2 emission produced in one place with the act of reducing emission in another place.
Since the world’s carbon emissions are increasing at an alarming rate, carbon offset is rapidly increasing in importance as a mechanism to battle against climate change and global warming.
How Does Carbon Offset Work?
While it may sound complex and overwhelming, carbon offsetting is actually a quite simple concept.
Basically, a company as a carbon emitter is able to invest in offsets rather than actively reducing their own emissions. Carbonfund.org said that carbon offset derived from a third-party certified project that usually may generate a carbon credit.
Carbon offset allows companies to balance out the climate impact and compensate for the emissions they produce. It’s achieved by reducing the CO2 and other greenhouse gas emissions in other parts of the world.
The carbon offset are typically taking place in developed countries and usually represent in common types as follows:
This way aims to counteract the deforestation and help to absorb incredible amounts of CO2 from the atmosphere. The forestation often takes place in developing countries and sometimes includes planting thousands or even millions of trees at a time.
2. Reducing Emissions from Deforestation and Forest Degradation (REDD)
Simply stated, REDD is the framework that aims to create financial incentives to reduce deforestation, reduce degradation, and promote sustainable management. Through this, companies or private sectors pay countries to not cut their forest as an exchange for their carbon credits.
3. Clean water access
As a project example, only 5% of the population in rural Madagascar have access to drinking water. Sometimes, boiling water may help against this but it requires wood stoves which not only causes air pollution but also releases CO2 to the atmosphere. The wood burned in stoves is often unsustainably harvested. Thus, by providing clean water access the cost for fuel is reduced and there will be more families spending less time collecting firewood for the stove.
4. Wind Turbines
Wind turbines can displace fossil-fueled generation and will avoid huge amounts of carbon dioxide. The use of wind turbines can also earn carbon credits for the emission reduction it produces. Once these carbon credits are certified, it can be used as an offset to your emissions.
5. Investing in renewable energy
According to theecobahn.com, directly financing renewables energy in order to reduce fossil-fuel demand is considered as the most effective way of carbon offsetting. Renewable energy plants are also guaranteed to have long lifetime and make a measurable difference to emission reductions.
The Leading Carbon Offset Program
If you are looking for an example of what carbon offset program that has been done before, these are several popular carbon offset companies around the world:
3Degrees claims to be the largest supplier of voluntary carbon offsets in the US, working with several companies. On a broader scale, 3Degrees is involved in renewable energy projects and its carbon offset programs focus primarily on methane capture or combustion and industrial energy-efficiency.
ClimatePartner offers carbon offset specifically to eCommerce companies as well as reforestation projects and hydropower investment in Africa, Asia, and South America. Since its emergence in 2006, ClimatePartner provides a trackable ID number on packaging that allows customers to track specific carbon offset related to their purchase.
Climatefriendly is an Australian carbon offset provider focusing on farming, soil management, and land regeneration. As part of Australian Carbon Industry’s Code Of Conduct, Climatefriendly is collaborating with farmers and local communities in order to offer offsets programs for business owners and investors.
Since carbon dioxide is a global impact gas, both carbon credits and carbon offsets have the same reduction in the emissions of this gas and the exact benefit to the planet in terms of climate change.
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