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'Carbon credit' is a phrase that's popping up more and more these days, and it often leaves people scratching their heads, trying to figure out what it really means. To help clear things up, we've put together this handy guide to answer the top five questions we most often hear about carbon credits. Our goal? To clear up any confusion and make understanding carbon credits a breeze.
We’ll answer the following:
👉 In this article, we've answered five of the most common questions surrounding carbon credits to help you better understand what they are and how they work.
The concept of carbon credits is rooted in the international commitment to reduce greenhouse gas emissions and mitigate the worst impacts of climate change. As a financial tool designed to offset the carbon emissions produced by individuals and corporations, carbon credits are an important element in the broader strategy to combat climate change.
Generally speaking, one carbon credit represents the avoidance or removal of one metric tonne of carbon dioxide (CO2) from the atmosphere. Therefore, when you buy a carbon credit, you're financially supporting efforts to prevent or reduce an equivalent amount of emissions elsewhere.
In practice, carbon credits fund a wide range of initiatives aimed at reducing greenhouse gas emissions. Some projects involve the direct absorption of carbon dioxide, such as afforestation (planting new forests), or reforestation (replanting existing forests).
Other projects might involve the development and implementation of renewable energy sources like wind or solar power, which produce electricity without generating carbon dioxide emissions. Or it could be a project involving methane capture at landfills or farms, preventing this greenhouse gas from being released into the atmosphere in the first place. The list of potential projects is long and varied.
👉 To read more about carbon offsetting and removal projects, why not check out our article.
Ultimately, carbon credits represent a growing awareness of our individual and collective responsibilities to the planet and future generations. By buying a carbon credit, you're not just compensating for your personal carbon emissions - you're also investing in a cleaner, more sustainable future. It's a way of saying, "I recognise the impact of my actions, and I'm willing to take responsibility for them." While it's not a perfect solution, it is a step in the right direction towards a world that is more conscious of its carbon footprint and more dedicated to mitigating the effects of climate change.
Here's how carbon credits usually work:
A carbon credit is a tradable request, that represents a certain amount of carbon dioxide being removed from the atmosphere, in exchange for a carbon footprint that’s already been made.
A carbon offset, on the other hand, refers to the action of compensating for greenhouse gas emissions by supporting projects that reduce emissions or remove carbon dioxide from the atmosphere. Offsetting involves purchasing carbon offsets to counterbalance one's own emissions, effectively balancing the carbon footprint.
Let’s take a closer look at the key differences:
👉 To learn more about carbon offsets, why not check out our article.
Carbon credits offer a number of benefits when it comes to addressing climate change and reducing the levels of harmful greenhouse gases in the atmosphere. Let’s take a closer look at some of the main advantages:
❗️ However, it's crucial to acknowledge the limitations of carbon credits. They do not eliminate or reverse the carbon footprint already created. Individuals or companies still generate carbon emissions, and their investment in carbon reduction projects cannot undo the emissions they've already produced. This is why they should be seen as a complement to, not a substitute for, efforts to reduce emissions at their source through sustainable practices and policies.
Some enterprises, particularly airlines, have made it relatively convenient to purchase carbon credits, especially when it relates to your recent travels.
However, there are alternative avenues for investing in carbon credits. You can explore options like stock investments, exchange-traded funds, or participate in a government-controlled auction system, such as the European Union Emissions Trading System.
Let’s take a closer look at some of the different ways to invest in carbon credits:
👉 To learn more about the carbon market, read our article on the topic.
It's important to note that carbon credits should not be relied upon as the primary strategy to mitigate carbon footprints or address the impact of activities contributing to global warming.
In addition to acquiring carbon credits, individuals and companies have a range of impactful strategies at their disposal to combat global warming.
So, apart from investing in carbon credits, what other approaches can you or your company embrace to mitigate the effects of climate change?
We are all guilty of leaving our laptop chargers in the outlet, or the lights in the kitchen on when we aren’t there. It only takes a minute to scan the room before leaving your house to make sure any lights, devices, or chargers are turned off.
Not to mention – using less electricity isn’t only better for the environment, but it can help lower your electric bill, too!
Most of us are guilty of re-purchasing a plastic water bottle every day, but the reality is that there’s no need for this anymore.
Many cities around the world have made public water fountains easily accessible. So, why spend money on a new, plastic water bottle that will end up going to waste when you could buy a reusable water bottle once – and fill it up for free?
The plant-based food scene has exploded over the last couple of years, mostly due to the clear health benefits – but did you know that it’s better for the environment, too?
Animal production contributes to over 65% of the planet’s human-produced nitrous oxide emissions. If more people were vegan or even went for “Meatless Mondays” – less of this detrimental production would occur, and the environment would benefit immensely.
It's also surprising to discover that producing food for a vegan requires only one-third of the water needed to produce food for an omnivore. This means that by reducing your meat consumption, you significantly decrease your water consumption as well.
So, the next time you’re on your lunch break – opt for that oat milk latte and the quinoa salad!
Not only will you be eating cleaner, but you’ll be reducing your carbon footprint at the same time.
If you live in a busy city, seize the opportunity! There's no reason to endure traffic jams or shell out exorbitant amounts of petrol.
Consider taking advantage of public transportation like the metro, subway, or bus, at least once a week. And if you have the convenience of walking or biking to your school or workplace, what's holding you back?
Not only will you incorporate more physical activity into your routine and save money, but you'll also make a significant impact in reducing your carbon footprint.
The trend of thrift shopping has witnessed a surge in popularity in recent years, and not only is it a fashionable choice, but it also holds significant environmental benefits.
By embracing the practice of purchasing recycled clothing, the demand for newly manufactured garments decreases. As a result, the environmental impact associated with production is reduced.
Thrift shopping proves to be a cost-effective alternative to buying brand-new items and also has the potential to drive major companies to scale down their clothing production.
At Greenly we can help you to assess your company’s carbon footprint, and then give you the tools you need to cut down on emissions. Why not request a free demo with one of our experts - no obligation or commitment required.
If reading this article has inspired you to consider your company’s own carbon footprint, Greenly can help. Learn more about Greenly’s carbon management platform here.
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