Have you ever wondered how you can help address climate change and, at the same time, gain economic benefits? There is a way to do it: it’s called a carbon credit, and it is a financial instrument that lets you offset your greenhouse gas (GHG) emissions that are unavoidable or cannot be reduced beforehand.
What are carbon credits?
Carbon credits were born as part of the Kyoto Protocol, an international agreement signed in 1997 by more than 190 countries to reduce the GHG emissions that cause global warming.
The Protocol established that developed countries, the main parties responsible for pollution, had to reduce their emissions by 5% relative to 1990 levels. To facilitate this goal, mechanisms were created that allow countries to meet their commitments in a cost-effective and efficient way.
Among these mechanisms is the Clean Development Mechanism (CDM), which facilitates the financing of emission-reduction projects in developing countries, driving economic growth and improving quality of life there.
These projects can be of different types, such as reforestation, renewable energy, energy efficiency, waste treatment, etc. By financing them, developed countries obtain carbon credits.
Each credit is equivalent to one ton of CO2 that is prevented from being emitted or is captured from the atmosphere. They can be used to meet a country’s own reduction targets, or they can be sold on the carbon market to other countries or companies that need them.
How are they acquired?
The carbon market is a system that allows carbon credits to be bought and sold among the participants of the Kyoto Protocol or of other climate agreements.
They are traded in regulated markets, such as the European Union Emissions Trading System (EU ETS), or in voluntary markets, where buyers have no legal obligation to reduce their emissions but do so for ethical and social reasons.
The price of the carbon market depends on several factors, such as the type of instrument, the place of origin and destination of the emissions, the quality and type of project that generates them, and supply and demand.
In Colombia, for example, there is a voluntary carbon credit market that can be accessed by companies wishing to offset or reduce their greenhouse gas emissions.
Since 2016, the national carbon tax has been in place, which taxes the consumption of liquid fossil fuels, such as gasoline, kerosene, jet fuel, diesel (ACPM), and fuel oil, at a rate tied to the carbon content they produce.
This tax seeks to discourage the use of these fuels and to create a fund aimed at environmental initiatives, and it can be paid in two ways: in cash or in carbon credits.
If paid in cash, the corresponding rate must be paid for each ton of CO2 emitted. If paid in carbon credits, a certificate must be submitted attesting to the reduction or capture of one ton of CO2 equivalent.
Learn more about how you can obtain high-quality carbon credits
What are the benefits for your company?
Carbon credits are an effective and cost-efficient tool for your company to manage its carbon footprint and support the transition to a low-carbon economy. By buying them you can:
Improve your corporate image and reputation:
By purchasing carbon credits, your company demonstrates its commitment to sustainability and environmental care. This can improve your relationship with your customers, suppliers, employees, and shareholders, who increasingly value the responsible and ethical practices of companies.
Reduce operating costs and increase competitiveness:
By supporting climate change mitigation and adaptation projects, your company can benefit from technological innovation, energy savings, the diversification of energy sources, and the improvement of local communities’ quality of life.
Access new markets and business opportunities:
The global carbon market offers a wide variety of options and opportunities to invest in climate action projects. These projects can be located in different regions and sectors, allowing your company to broaden its reach and its network of contacts. In addition, you comply with the international regulations and standards that require emission reductions.
Now you know: by buying carbon credits, your company can generate a positive impact on the environment and on society, while improving its financial performance and competitiveness.
Our comprehensive platform can guide you step by step through this process, from the precise measurement of your emissions to the selection of high-quality offset projects. Be part of the change toward a more sustainable future. Discover how in our free demo.