The Life of a Carbon Credit
It is important to understand the complex journey of a carbon credit and identify key areas for improvement to build trust within the market. Carbon credits are not created overnight; they go through a meticulous process to ensure they are real, additional, verifiable, permanent, and unique. Here is a step-by-step overview of the typical life of a carbon credit as outlined by the RMI.
Project Design: It all begins with project developers who conduct feasibility studies and select methodologies for quantifying emissions reductions or removals. These methodologies can be pre-approved or proposed, but they must adhere to strict standards.
Registration: Once the project is designed, it must be registered under an accredited standard. Four major carbon standards, including Verra, Gold Standard, Climate Action Reserve, and American Carbon Registry, certify credits in the voluntary carbon market.
Monitoring, Reporting, and Verification (MRV): Registered projects undergo rigorous MRV processes to ensure they genuinely reduce or remove carbon emissions. Third-party verifiers are contracted to validate the accuracy of these claims.
Issuance: After successful verification, the project begins to issue carbon credits, with each credit representing one ton of carbon dioxide equivalent (tCO2e).
Transaction: Carbon credits reach buyers through various channels including our very own ClimateTrade marketplace, These transactions need to be transparent and trustworthy.
Retirement: The final buyer of the carbon credit “retires” it, signaling that they have claimed the environmental benefit. Once retired, the credit is permanently removed from the market. Our blockchain technology helps to reassure buyers as blockchain ledgers cannot be duplicated or altered.
Despite this meticulous process, the voluntary carbon market has been plagued by a lack of trust due to concerns about the credibility and transparency of these credits.
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- Source: https://climatetrade.com/what-will-it-take-to-build-trust-in-the-voluntary-carbon-market/
