What are Carbon Credits and how it works?
You can think of carbon credits as a "permission slip" for a company to emit up to a certain set amount of CO2e that year. Carbon credits are generated from projects around the world that pull greenhouse gases (GHGs) out of the atmosphere, or keep them out altogether. Each time a project verifies they have reduced, avoided or destroyed one metric tonne of GHGs, one carbon credit is created. It is a way of balancing the scales on pollution.
Where can carbon Offset be generated?
To reduce local air pollution, you need to have your offset in the vicinity of the pollution source, like a coal power plant. Otherwise, the offset won't do anything to improve air quality. However, that is not the case for human-produced greenhouse gas emissions that are changing the climate. Since climate change is a global problem, it doesn't matter where you reduce emissions. You can reduce emissions at a location of your choice, and for organisations with limited resources, it makes sense to reduce emissions where it is cheapest and easiest to do so.
What are the various projects providing Carbon Offsets?
Some of the most popular offsets involve nature-based solutions like Cool Effect's wetland and forest restoration projects. For industry based solutions one of the best is industrial gas destruction project. Gases like HFCs and N2O are potent heat trappers in the atmosphere, much more powerful than carbon dioxide, so reducing their emissions has a huge impact in mitigating climate change. Since they come from industrial sources, these gases are easier to quantify and track. When the gases are captured and destroyed, the emissions reductions are permanent. Offsets can also be achieved by implementing renewable energy and energy efficiency projects. The offsets earned from such projects provide incentives to support these renewable energy projects. In the future, offsets may come from sucking carbon dioxide straight from the air via technologies known as direct air capture.
What is Carbon Accounting?
Carbon accounting or greenhouse gas accounting refers to processes used to measure how much carbon dioxide equivalents an organization emits. It is used by states, corporations, and individuals to create the carbon credit commodity traded on carbon markets (or to establish the demand for carbon credits). Examples of products based on forms of carbon accounting may be found in national inventories, corporate environmental reports, and carbon footprint calculators. Greenhouse gas accounting describes the way to inventory and audit greenhouse gas (GHG) emissions. A corporate or organisational GHG emissions assessment measures the organization's carbon footprint by quantifying the total amount of greenhouse gases the organization produces, whether directly or indirectly. The information provides basis for understanding and managing climate change impacts and may be used as a business tool. The drivers for corporate GHG accounting include mandatory GHG reporting in directors' reports, investment due diligence, shareholder and stakeholder communication, staff engagement, green messaging, and so on.