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Carbon market

This page explains how emissions can be inset and offset as well as the voluntary carbon market and certification
Image source Terravesta
Insetting and offsetting of emissions

Carbon dioxide (CO2) emissions have the same climate impact regardless of their source. Therefore, the effect of a tonne of CO2 emitted in one place should be negated by capturing an additional tonne of CO2 somewhere else. Offsetting is the process by which activities that capture carbon, such as new tree plantings, are used to achieve a reduction in atmospheric CO2 levels equivalent to an amount arising from industrial or other human activity. Insetting is similar, but refers to the offsetting of emissions, usually by a business, within its value chain but outside of its own operations (often referred to as scope 3 emissions).

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Carbon credits and the voluntary carbon market

A carbon credit is one tonne of measured and verified CO2 emissions (or equivalent for other greenhouse gases) that has either been reduced/avoided or removed/sequestered, and which a business or individual can purchase to offset one tonne of their own CO2 emissions. Voluntary carbon markets are trading systems whereby credits can be bought and sold on a voluntary basis, operating without direct government or regulatory oversight. Voluntary carbon credits can be sold/purchased via a broker or directly via a registry such as Verra, Gold Standard, Climate Action Reserve and the American Carbon Registry. Once purchased, a carbon credit is no longer tradable (the credit must be ‘retired’). Verification schemes include the Verra Verified Carbon Standard (VCS), Gold Standard Voluntary Emission Reductions (VER) and United Nations Certified Emission Reductions (CER).

Carbon markets and verification schemes differ in the way that soil carbon sequestration is estimated. Long-term monitoring through field sampling and testing is not viable due to cost, so models are widely used. However, direct measurements are needed periodically to check they are sound. Remote sensing and data platforms offer the potential for more efficient and cost-effective monitoring at scale and over time.

In contrast to the Voluntary Carbon Market, Compliance carbon markets, such as the European carbon compliance market, are regulated by mandatory regional, national, or international carbon reduction regimes. These usually apply to sectors such as power generation and other energy intensive industries.

High quality carbon removals and certification

Carbon removal is the deliberate process of capturing CO2 from the atmosphere and storing it in a product or some form of reservoir, potentially the soil. Several criteria have been proposed in order that carbon removals can be certified as ‘high quality’. These include accurate quantification, ability to achieve long-term carbon storage, prevention of leaks, delivery of additional climate benefits, and contribution to wider sustainability goals. Those undertaking such carbon removal activities would require them to be regularly verified by an independent certification body under a public or private scheme. Verified high quality carbon removals would then be recorded in a publicly accessible registry.

An important principle within high quality carbon removals is the concept of ‘additionality.’ Emissions reductions or removals that result from a carbon capture activity are only considered to be additional if the activity would not have happened without the funding from the carbon credits. For example, if a grower is incentivised or required by the buyer of their crop to use production practices that raise their soil organic matter levels, the associated increase in soil carbon would not be considered a high-quality carbon removal.

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