- March 30, 2023
Here’s how carbon market can play an important role in stopping global warming.
A market that may support businesses’ efforts to reduce their own emissions is emerging as corporate leaders make ever-more ambitious commitments to reduce global greenhouse-gas (GHG) emissions. This is the market for voluntary carbon credits, which is expanding quickly. By allowing businesses to support decarbonisation beyond their own carbon footprint, carbon credits quicken the transition to a lower-carbon future globally. Additionally, they assist in funding initiatives to reduce atmospheric carbon dioxide by generating negative emissions, which are necessary to offset lingering emissions that will continue to exist even in the most decarbonisation scenarios. The market for voluntary carbon credits is currently gaining a lot of pace, but it is still quite limited.
A carbon credit is a document that certifies the removal of one metric tonne of carbon dioxide equivalent from the atmosphere as a result of a carbon-reduction project or its prevention from entering the atmosphere (emissions avoidance/reduction). A carbon-reduction project must show that the emission reductions or carbon dioxide removals accomplished are genuine, quantifiable, long-lasting, additional, independently validated, and one-of-a-kind in order to create carbon credits. If a project meets these criteria, as specified by independent standards such as Gold Standard and Verified Carbon Standard (VCS), credits can be issued. The impact of a carbon credit can only be claimed once the credit has retired, meaning it can no longer be sold. When a carbon credit is purchased and retired voluntarily rather than as part of a procedure for adhering to legal duties, it is referred to as a “voluntary carbon credit.”.
The creation of projects that reduce carbon emissions across a wide range of project types is made possible by the money generated by the sale of voluntary carbon credits. These include resource recovery, avoiding methane emissions from landfills or wastewater facilities, renewable energy, avoiding emissions from fossil fuel alternatives, natural climate solutions like reforestation, preventing deforestation, or agroforestry, and energy efficiency. While the majority of these project categories, such as resource recovery, avoided deforestation, and renewable energy, concentrate on preventing carbon emissions, others, like reforestation, concentrate on removing carbon dioxide from the atmosphere. This significant distinction highlights the dual role that voluntary carbon credits can play in combating climate change:
In the short term – Voluntary carbon credits from projects focused on emissions avoidance can prevent the acceleration of decarbonised global economy. Avoidance of emissions is usually the most cost-efficient way to reduce greenhouse gas concentrations.
In the medium – long term, voluntary carbon credits can help in scaling up carbon dioxide removals to neutralise residual emissions. This can be done through reforestations and nascent technology.
The world might achieve a huge improvement with the help of voluntary carbon credits. By allowing businesses to assist decarbonisation beyond their own carbon footprint and by funding carbon dioxide removal initiatives, they may both hasten the transition to a future with reduced carbon emissions. Addressing present issues and expanding the voluntary carbon market are necessary in order to realise this potential. Achieving that will have a big impact on the fight against climate change as well as the preservation of environment and the incalculable advantages it offers to humanity.