There is no single carbon credit market. While, in general, 1 carbon credit is always defined as 1 tonne of CO₂, there are different classifications of carbon credits. In particular, there are mandatory markets for certain industrial sectors in the EU and other countries, and voluntary markets.
Currently, carbon credits existing in one specific market cannot enter another.
- The voluntary credit market consists of a supply of credits generated by various project developers using methodologies ranging from afforestation to the distribution of improved cooking stoves, access to clean water and renewable energy sources, and many others.
- On the other hand, there are buyers of carbon credits, typically companies that, after measuring and reducing their emissions, also want to offset their residual emissions. To offset them, they purchase carbon credits from the voluntary market.
Between supply and demand there are various entities, such as certification bodies, verifiers, and national public bodies in the country hosting the projects that generate carbon credits: all these actors work to ensure the correct generation of carbon credits.
1 carbon credit is equivalent to 1 tonne of CO₂ avoided or absorbed. Calculating the tonnes of CO₂ avoided is quite complex and depends on many parameters, depending on the specific calculation methodology.
For example, in the case of clean cooking projects, the wood savings made possible by an improved stove or induction hob are measured compared to an initial situation of less efficient food cooking.
Or, in the case of projects that provide clean water, the amount of water supplied is measured.
While some parameters are related to the project itself, others depend on the area of intervention, such as the FNRB (fraction of non-renewable biomass), i.e. the amount of biomass (trees) cut down without replacement.
Areas where desertification is advancing usually have a rather high value for this parameter and can therefore generate a greater number of carbon credits.
Verification and certification bodies are the control bodies that approve all calculations made by project developers, ensuring transparency in the generation of carbon credits.
Carbon credits are usually owned by the project developer who implements the project. The name of the developer is public and visible in the official registers of the various certification bodies.
Developers sell credits directly to companies that use them to offset their emissions, or to intermediaries who then offer them on the market.
Once the credits are entered in one of the official registries (e.g. GoldStandard), they are approved by the registry itself and then transferred from the seller to the buyer.
There are two possible approaches, one more speculative and the other more closely linked to individual projects:
- The first involves purchasing existing credits and then reselling them to entities that cancel them to offset their own emissions.
- The second, more ethical approach involves investing in credit generation projects from the outset and waiting 1-2 years for them to generate the first credits to be sold. In this way, the investor participates in the development of the project alongside the project developer.
To obtain carbon credits certified according to the main international standards (GoldStandard, Verra, etc.), you need to contact a project developer who can supply the credits directly. Alternatively, you can turn to intermediaries or trading platforms.
I crediti di carbonio, per essere generati, devono seguire metodologie internazionali standardizzate.
Queste prevedono che i progetti vengano verificati da un ente terzo accreditato, in grado di validare i parametri tecnici comunicati dal project developer.
La lista degli enti accreditati è disponibile nei siti ufficiali dei registri come GoldStandard o Verra.
In Italy, it is virtually impossible to generate carbon credits certified according to international standards because the additionality criterion is almost always lacking. Additionality means that a project would not be economically viable without the credits.
For example, a photovoltaic plant is now viable on its own and therefore does not generate certifiable credits.
However, there are agricultural projects that do not fall within the main international standards.
Companies of all sizes and from all sectors can purchase carbon credits. The correct approach to credits is to first measure the company’s emissions, then reduce them through direct action, and finally use carbon credits as a means of offsetting the remaining amounts. Since a single carbon credit, equivalent to 1 tonne of CO₂, is worth a few dozen euros, anyone can purchase a modest amount of credits.
Carbon credits can be purchased by anyone, whether individuals or legal entities. Purchasing 1 carbon credit means offsetting your emissions by 1 tonne of CO₂ equivalent.
It is preferable to purchase certified carbon credits directly from the project developer who implements the projects, thus avoiding all intermediation costs that add nothing but extra expenses to the quality of the credits. Alternatively, there are international trading platforms where you can find different types of credits.
The value of carbon credits varies greatly and generally depends on the type of project that produces them.
For example, projects related to renewable energy sources are now considered low quality, as they are already sustainable operations even without carbon credits. The value of these credits can reach 2-3 dollars.
Clean cooking projects to reduce emissions linked to food preparation have a higher value, ranging from 10$ to 20$. Water access projects can reach even higher values.
It is therefore impossible to establish a precise value because it is necessary to analyse the individual projects that generate them. A reasonable average price is between 10 and 15 dollars per credit.
Generating certified carbon credits comes at a considerable cost. There are project implementation costs, perhaps in remote areas of Africa, bureaucratic costs related to authorisations and taxes to be paid.
Therefore, it is a very complex activity and still involves very few players worldwide. The mere certification process is then carried out by an international body, but achieving this goal requires a great deal of implementation effort.
