How is the actual emissions reduction quantified? Is it based on a formula? If so can you share that with me?
The emissions are quantified using the formulas in the Protocols. Trido handles this so our clients do not have to.
What is a carbon credit?
A carbon credit represents one tonne of (Carbon dioxide equivalent) CO2e avoided or removed from the atmosphere.
What is CO₂e?
CO₂e, or carbon dioxide equivalent, is a standardized measure used to compare the emissions of various greenhouse gases (GHGs) based on their global warming potential (GWP). It allows different GHGs to be expressed in terms of the amount of CO₂ that would have the same global warming effect.
What is Global Warming Potential (GWP)?
GWP is a measure of how much heat a greenhouse gas traps in the atmosphere over a specific period (usually 100 years) compared to CO₂. It provides a standard scale for comparing the impact of different GHGs.
- Examples:
- CO₂: GWP of 1 (baseline)
- Methane (CH₄): GWP of 28 (i.e., 1 tonne of CH₄ has the same warming effect as 28 tonnes of CO₂ over 100 years)
- Nitrous Oxide (N₂O): GWP of 265
- Fluorinated Gases (e.g., HFCs, PFCs, SF₆): GWPs ranging from hundreds to thousands.
Sample Calculation for CO₂e
- Formula: CO₂e = ∑(Mass of GHG × GWP of GHG)
- Example: If an emission source releases 1 tonne of CH₄ and 1 tonne of N₂O, the total CO₂e would be: CO₂e = (1 tonne of CH₄ × 28) + (1 tonne of N₂O × 265) = 28 + 265 = 293 tonnes CO₂e
How are carbon credits generated?
Carbon credits are generated by executing and registering an emission reduction, carbon capture or renewable energy project.
What is the difference between carbon credits and carbon offsets?
Carbon credits and offsets represent one tonne of CO2e avoided or removed from the atmosphere. However, they operate in different contexts and serve different purposes. Carbon credits are part of regulated systems designed to cap and reduce emissions. In contrast, carbon offsets are used to voluntarily compensate for emissions by supporting projects that reduce or remove greenhouse gases from the atmosphere.
What is the difference between carbon tax and carbon credit?
The concepts of carbon tax and carbon credits are tools designed to reduce greenhouse gas (GHG) emissions, but they operate in fundamentally different ways.
A carbon tax directly sets a price on carbon by levying a tax on the carbon content of fossil fuels or the amount of GHG emissions produced.
It provides predictability and simplicity but has the disadvantage of a fixed cost and potential regressive economic impact.
Carbon Credits are part of a market-based and cap-and-trade system where companies or entities receive or buy credits that permit them to emit a certain amount of GHGs.
They offer market-based flexibility and an incentive for innovation but are more complex and carry the risk of market volatility and potential fraud.
Notable Differences:
- Carbon Tax directly influences the price of emissions, while Carbon Credits directly influence the quantity of emissions.
- Revenue generated by Carbon Tax goes to the government, while the trade of Carbon Credits generates revenue for entities selling excess credits.
Does Trido enforce the carbon tax for the federal government?
No, we do not.
Does Trido work for the government?
No, we do not.
Do carbon credits reduce emissions?
Carbon credits can help reduce emissions by funding projects that directly cut or remove greenhouse gases (GHGs), creating financial incentives for sustainable practices, and helping companies comply with regulatory caps. However, their effectiveness relies on robust verification, monitoring, and management to ensure the integrity and permanence of the emission reductions.
Can an individual generate carbon credits?
Individuals can generate carbon credits by implementing projects that reduce or remove greenhouse gas emissions and having these reductions verified and certified by an appropriate authority. Steps for individuals to generate carbon credits include identifying a suitable project, using approved methodologies, monitoring and collecting data, verification, certification and registration, and selling carbon credits. However, the challenges for individuals include the scale, cost, and required knowledge and expertise. Examples of support for individuals generating carbon credits include community aggregation and government and NGO programs.
How do I transact my carbon credits?
Transacting carbon credits involves several steps, including selecting a marketplace, ensuring proper documentation, and conducting the sale or purchase through established platforms. Key steps include:
- Choosing a marketplace (carbon exchanges, brokerage services, or direct sales)
- Registration and verification (project registration and third-party verification)
- Listing carbon credits for sale (determining pricing, listing credits, and executing the transaction)
- Executing the transaction (negotiation, drafting a contract, payment and credit transfer), and post-transaction reporting.
The process aims to support environmental goals and financial objectives by effectively trading carbon credits.
What can you do with carbon credits?
The primary uses of carbon credits are Compliance with Regulations through market-based and cap-and-trade systems, regulatory compliance, Voluntary Offsetting for corporate sustainability and individual action, Trading and Investment for market speculation and supporting environmental projects, and Strategic Planning and Policy Compliance for corporate strategy.
Why are carbon credits important?
Collecting carbon credits is important for several reasons:
1. Environmental Responsibility: Combat climate change by reducing carbon footprint and supporting sustainable projects like renewable energy and reforestation.
2. Regulatory Compliance: Meet legal requirements, such as cap-and-trade programs and prepare for and comply with future emissions reduction mandates.
3. Financial Incentives: Avoid penalties and generate revenue by selling excess carbon credits.
4. Reputational Benefits: Enhance brand image and attract environmentally conscious consumers.
5. Investor and Stakeholder Relations: Attract investment by demonstrating strong environmental practices and improving stakeholder relations and support by meeting climate change expectations.
6. Strategic and Operational Benefits: Manage risks associated with climate change and improve operational efficiency and cost savings through emissions reduction initiatives.
How are carbon credits tracked and verified?
1. Project registration and validation, including documentation and third-party validation.
2. Monitoring and data collection involve ongoing monitoring and periodic reporting.
3. Verification and certification by an independent verifier to confirm accuracy and credibility.
4. Issuance and registration of carbon credits, including credit issuance and unique identification in a centralized registry.
5. Trading and retirement of carbon credits, where credits can be traded on marketplaces and retired when used to offset emissions.
Are carbon credits only available in Alberta?
No, carbon credits are available globally and can be generated, traded, and utilized in various regions worldwide. They are available in global carbon markets, regional and national markets, Alberta's carbon market, and voluntary carbon markets. Some notable standards and markets include the Verified Carbon Standard (VCS), the European Union Emissions Trading System (EU ETS), California Cap-and-Trade Program, and China’s National ETS. Alberta has its own carbon offset system and voluntary market platforms like the Gold Standard Marketplace and Verra Registry. International carbon credits offer flexibility, innovation, project opportunities, and quality assurance, making them valuable for reducing greenhouse gas emissions and supporting sustainable development globally.