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What are carbon credits?
What are carbon credits in a nutshell? We could define them as a useful tool for:
- Track the CO₂ absorbed/avoided by certified projects;
- Quantify the CO₂ compensated by those who purchase them;
- create a market and balance the effects of climate change by funding projects in the most affected areas of the planet.
By meeting sustainable development goals, the Voluntary Carbon Market enables concrete actions for sustainability and environmental protection. In order for these goals to be met, however, it is only fair that carbon credits be certified according to relevant international standards .
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Carbon credit: why buy them?
Carbon credits are certificates that attest to the capture or non-emission of 1 ton of CO₂ and can be acquired by a company, entity or institution. They thus certify actual commitment to offsetting emissions, with a specific and measurable amount.
Purchasing carbon credits means differentiating yourself from competitors because you can have a concrete and positive impact on the environment while reporting in an official, clear and internationally recognized way on your commitment.
This, coupled with activities to reduce emissions caused by one's own activities, will give the company a competitive advantage (large companies are increasingly looking for sustainable partners and suppliers for a green supply chain) and a concrete way to portray its image as a sustainable company.
Companies that purchase carbon credits can use a carbon label on their products and services, which certifies that they are offsetting all or part of their emissions. This not only serves as evidence of the concreteness of the sustainability path taken, but also gives real value:
- social, because they testify to a commitment to support the communities and areas of the planet most affected by global warming;
- financial, because they tell investors and potential customers about the strategies they have actually implemented to reduce their environmental impact.
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The carbon credit system and certifying bodies
Verra is the international body that sets the standards to which sustainable projects must adhere in order for them to generate "Verified Carbon Standard" certified carbon credits.
Verra-accredited entities, such as Up2You, handle carbon credits generated by sustainable projects and allocate them to companies that want to offset their emissions.
What requirements must environmental projects have in order to be verified?
- Reality: the project must be real and it must be proven to offset CO₂ emissions.
- Measurability: emission reductions must be able to be measured according to tools established by the international standard. A single carbon credit is equivalent to one metric ton of CO₂: the number of credits issued by the project must accurately reflect the amount of emissions that have been captured from the atmosphere or avoided.
- Permanence: it must be demonstrated that emission reductions will not be "reversed" in the long term or that the CO₂ removed will not be released back into the atmosphere. For example: if a forest project is located in a region with a high prevalence of wildfires, the forest could be affected and release carbon that had been sequestered into the atmosphere.
- Additionality: the project must be developed with the sole purpose of capturing/avoiding CO₂ emissions, and its economic viability derives from that. If, for example, we consider fruit trees, they were probably planted and are tended to produce fruit, and the CO₂ they capture is not really additional compared to if we had not invested in offsets: they would have been there anyway.
- Positive co-benefits: some projects go beyond reducing emissions by implementing activities that benefit local communities and biodiversity. For example: if a project protects a forest but compromises the livelihoods of local communities by cutting off an essential source of income, it is a poorly designed project and not in line with the SDGs.
- Third-party audit: all emission reductions must be verified by an accredited third party.
- Transparency: information about projects and carbon credits must be clear and accessible.
- Conservativeness: the ability of projects to reduce GHG emissions should not be overestimated; moreover, only the CO₂ already avoided/captured should always be considered (do not project that which will be captured in the future, e.g. throughout the life of the plant).
Verified Carbon Standard is the most widely used standard for the system of investing, purchasing and recording carbon credits, which, as the graph below shows, have increased exponentially over the past 10 years. This graph makes us proud to be part of this network, where companies can take concrete actions to combat climate change by reducing and offsetting CO₂ emissions. That's why we are always working harder to raise awareness of the Voluntary Carbon Market in Italy.
Interested in learning more? The Up2You Insight team has produced a comprehensive and free guide that explains how the carbon credit market works.
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Carbon credit in Italy and the role of Up2You
Up2You is an authorized entity to withdraw and manage certified carbon credits (from today you can also buy Italian carbon credit). In addition to helping Italian companies become more sustainable through investments in certified projects, Up2You has developed Registry: it is the proprietary blockchain to register carbon credits in a safe and transparent way. You can visit it immediately to check the carbon credits assigned to our customers.
