While individuals and corporations around the world recognize the importance of reducing greenhouse gas (GHG) emissions, it’s nearly impossible to eliminate their carbon footprint on their own. This is where voluntary carbon markets come into play.
Through carbon markets, individuals and corporations can neutralize—or offset—their emissions by investing in emissions avoidance or reductions, or in projects that remove carbon from the atmosphere. Corporations can also pay other companies who have excess carbon allowance in their carbon “budget.”
Carbon credits are typically priced and calculated in terms of how many dollars it costs to reduce the amount of carbon (or other greenhouse gases) in the environment by a tonne. Every tonne of emissions reduced by an environmental project creates one carbon offset or carbon credit.
Verified emission reductions (VERs)—also known as carbon offsets, carbon credits, or carbon offset credits—are essentially emission reductions from an offset project that’s independently audited against a third-party verification standard. Traditional offset project types include reforestation and improved forest management, methane gas capture and destruction, and fuel switching.
Of course, it’s critical to verify that the reductions generated by these offset projects are actually occurring. Here’s how that’s done.
How are emission reductions verified?
Before any GHG reductions can be certified for use as carbon offsets, they must be proven to meet certain carbon offset quality criteria. Most carbon offset programs have approved methodologies (also called protocols) that cover a wide range of project types.
The most common verified emission reduction standards in the voluntary carbon market are:
- The Verified Carbon Standard (VCS) is a global standard for voluntary GHG emission reductions and removals. The VCS lays out the rules and requirements that all offset projects must follow in order to be certified. An organization named Verra (formerly Verified Carbon Emissions Standard) provides oversight to the VCS program and is responsible for updating the VCS rules.
- The Climate Action Reserve (CAR) is a United States–based offset program focused on ensuring transparency in North America’s voluntary carbon market. CAR oversees a number of independent third-party verification bodies, issuing and tracking carbon credits generated from offset projects in a publicly accessible system (or registry). CAR’s GHG emission reduction program is approved under the VCS.
- The Gold Standard is a certification mark program that works to ensure that carbon credits are verifiable and that projects make measurable contributions to sustainable development. The Gold Standard program is open to any non-government, community-based organization. To be eligible for Gold Standard Certification, a project must comply with the UN Millennium Development Goals and be reducing one of the three GHGs: carbon dioxide, methane, or nitrous oxide.
- The American Carbon Registry (ACR) oversees the registration and verification of carbon offset projects in the voluntary carbon market and California's regulated carbon market. In the voluntary market, ACR oversees the registration and independent verification of offset projects from around the globe that include: afforestation and reforestation; improved forest management; landfill gas destruction and beneficial use; methane recovery in animal manure management systems; carbon capture and storage; renewable energy and energy efficiency; and more.
What is the verification process?
All credits issued from any of the major carbon standards will have undergone an in-depth verification process by an accredited third-party verifier. Verification activities differ based on each project, but will typically include ongoing monitoring and reporting to ensure that the offset projects perform as predicted.
All projects must be tracked on registries to ensure the emissions reductions are not double counted. Carbon offset registries are systems for reporting and tracking offset project information including credits generated, ownership, sale, and retirement.
Dozens of GHG registries exist around the world, and most of them can be divided into two different categories: emissions tracking registries and carbon credit accounting registries.
- Emissions tracking registries identify emission reductions at the source, leaving others to track the credits once they enter the carbon market. In the United States, there are voluntary registries that collect company GHG data, including the Climate Registry, the California Climate Action Registry, and the Department of Energy’s 1605(b) Voluntary Reporting Program.
- Carbon credit accounting registries, on the other hand, are designed to “track the trades,” following the ownership of VERs as they are bought and sold. All Gold Standard Projects, for example, are retired on the IHS Markit registry, which is an independent establishment that increases transparency within the global environmental markets.
It’s important to note that some of the most cutting-edge carbon removal projects aren’t verified in the traditional sense—a growing number of corporations are investing in engineered carbon removal, which uses technologies to pull carbon dioxide from the atmosphere and either lock it away underground, reuse it, or turn it into minerals. While carbon offsets remain an effective tool for helping bend the climate curve, scientists warn that demands for climate action will soon surpass what can be achieved through cutting GHG emissions alone.