Carbon credits
Carbon credits are certificates that represent the reduction or removal of one metric tonne of CO₂ (or its equivalent in other greenhouse gases) from the atmosphere. Companies can purchase carbon credits to compensate for emissions they cannot eliminate, effectively funding climate projects like reforestation, renewable energy, or methane capture.
What types of carbon credits are there?
The main types of carbon credits are:
- Avoidance credits: Fund projects that prevent emissions from being released (e.g. renewable energy, clean cookstoves)
- Removal credits: Fund projects that actively remove CO₂ from the atmosphere (e.g. reforestation, direct air capture)
Are carbon credits mandatory?
It depends. For companies who fall under the EU Emissions Trading System (EU ETS) criteria, they are legally required to buy carbon credits or allowances to cover their emissions. Companies who aren't mandated to purchase carbon credits can still participate in voluntary carbon markets to support their sustainability strategy and compensate for their emissions. In the transport and logistics sector, most carbon credit use currently takes place in the voluntary market, but this may change as regulations like the CSRD and carbon pricing mechanisms evolve.
What is the difference between carbon credits and carbon offsetting?
Carbon credits are the certificates that represent one metric tonne of CO₂ (or equivalent) that has been reduced or removed from the atmosphere through a verified project. Whereas carbon offsetting is the action of using those carbon credits to compensate for emissions you cannot reduce directly.
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