Carbon Credits

Carbon credits as an industry is a relatively new one - designed to combat the devastating effects of climate change, and reduce the amount of carbon dioxide in our atmosphere. As such, understanding what makes a good quality carbon offset and how to navigate this market can be difficult.

What makes a carbon offset “good”?

A carbon offset by definition is meant to mitigate a carbon footprint - in general of a business - by replacing a tangible reduction in greenhouse gases (GHGs) produced with the ability for the environment to cycle out those GHGs through photosynthesis.
To this end, there are 5 main factors in evaluating a high quality carbon offset: Additionality, Estimation, Permanence, Independence & Impact.
Additionality is defined as the possibility of the project in the absence of carbon credits - which will be discussed later in this article. If an offset would have been created in the absence of carbon credits - such as by law, or as part of a production line - then the GHG reduction is not additional, and thus additionality is not achieved. This factor contributes value to the environment over and above the value already achieved without carbon credits.
Estimation entails the accuracy of the estimation of both the GHG emissions mitigated by the creation of the offset, and the GHG emissions generated once the offset is in place. These estimations also need to take into account secondary factors such as how long the project will take to achieve its estimation, and what knock-on effects that the project causes could lead to further GHG emissions.
Permanence considers the longevity of the project and factors which could interfere with that. A project that plants trees in an area prone to forest fires may not be considered permanent - as the carbon that it is responsible for offsetting has a high chance of being re-emitted as a result of the environmental conditions. While no reversal can be completely guaranteed, a strategy that is meaningfully considerate of secondary factors is crucial to establishing the permanence of a project.
Exclusivity is fairly straightforward - a carbon offset must be claimed by only a single entity, otherwise the offsetting of emissions cannot be meaningfully tracked. This means that two or more entities cannot own a credit for the same offset, and two or more entities cannot claim the reduction of emissions as their own.
Lastly, the Impact of a carbon offset needs to be well established beforehand, for potential environmental and social harm it could cause. An example of this can be from planting non-indigenous trees in an area which causes a degradation in the soil’s nutrients, leading to soil erosion and causing an impact on agricultural land in the surrounding areas.
Proper consideration of these five factors is absolutely essential in ensuring that a carbon offset both does properly offset the carbon required, and that it does not lead to further issues as a result of investment into it. A high quality carbon offset, then, is a project which adds value to its surrounding area, and meaningfully offsets carbon emissions on a scale which it has advertised.

Evaluating quality

While quality can be difficult to quantify in the early stages of a project - ensuring that the investment into an offset is worthwhile requires the purchasing entity exercise some due diligence.
Vetting projects beforehand is a crucial step in ensuring that the quality of an offset is not poor. Employing the use of a consultant to evaluate and recommend projects to generate carbon credit which suit buyer goals is a strong way to ensure investment into high quality carbon credits. Furthermore, considering the certifications of an offset project - such as efforts by the CCBA and SOCIALCARBON to verify co-benefits of carbon credits - can assist in gaining an understanding of a project’s value.
Engaging in solely lower-risk projects can inherently produce more consistently high quality results. However, lower-risk projects tend to be fairly industry specific - such as reducing emissions at a certain type of chemical plant - or purely forestry related - storing carbon through the planting of trees. While this can be effective in avoiding risk, it may not be viable if your business isn’t suited to a specific offset type, or if your goal is more than forestry focused.
Traditional indicators of value, such as price and age (or “vintage”), are of dubious value in evaluating the efficacy of a carbon credits. While cheap carbon credits are likely to have lesser value, the inverse is not true - an expensive carbon offset may not generate more capacity or more quality over a mid-range carbon offset. Likewise, the vintage of a carbon offset may have some value in establishing permanence; however, the value of that permanence needs to be critically evaluated against the other factors of quality.
Ultimately, carbon credits require a great deal of scrutiny to ensure that they are the quality advertised. A high quality project is an asset to a business and to our planet, but a low quality offset will cause more issues than it will solve.

Carbon credits & verifying quality

Carbon credits are another way of investing in high quality carbon offsets that work as defined, and contribute value to the environment.
Traditionally, this would entail having a forestry engineer manually travel out and measure the carbon mitigation potential of an offset project’s capacity. However, utilising a combination of AI technologies, and satellite imagery, this process can be automated - algorithmically analysing imagery of the forestry projects in real time and accurately reporting on the project’s capacity, longevity and health.
This type of integration of technology reduces cost, and allows an accountable approach to carbon credits - one which we ourselves seek to mirror by recording the offset value of our projects on the blockchain through NFT technology, to be accessible to anyone, and to be clear in its ownership and scale.
Our next blog post will focus on why we take the approach we do to ensure quality in our carbon credits - in ecosystem regeneration instead of nominal plantation.
The following piece is from​
The urgency is clear: incremental steps to address GHG emissions will not be enough. According to the Intergovernmental Panel on Climate Change (IPCC), the world has until 2030 to cut human-caused carbon dioxide (CO2) emissions in half (and cut other GHG emissions considerably) to maintain a 50% chance of avoiding the worst effects of climate change.
By 2050, CO2 emissions will need to reach “net-zero” – where emissions are in balance with removals – to sustain this chance. Such reductions will require worldwide action by national and local governments, along with businesses and civil society.
Companies and organizations will need to use every tool at their disposal to achieve emission reduction goals. “Carbon offsets” are one such tool that – if used responsibly – can help accelerate action to avert dangerous climate change.