Carbon Credits management pack

They are financial instruments that represent a verified reduction of one ton of carbon dioxide (CO2) or equivalent greenhouse gas (GHG) emissions from the atmosphere. These credits are generated from emission mitigation projects or carbon sequestration, and they can be sold to entities (e.g., companies) that wish to offset their own emissions or meet regulatory targets.

1. Emission Reduction Projects: These are projects that prevent the emission of GHGs into the atmosphere. Examples include generating energy from renewable sources, such as wind or solar, instead of fossil fuels.
2. Sequestration or Capture Projects: These are projects that remove CO2 from the atmosphere and store it in a stable form, like planting trees or using carbon capture and storage technologies.
3. Verification: Once implemented, the project needs to be monitored, and its emission reductions verified by certified third-party entities. Only after successful verification are the credits issued.
4. Certification: International organizations, such as the Clean Development Mechanism (CDM) under the Kyoto Protocol, or voluntary standards like Verra (formerly VCS - Verified Carbon Standard), are responsible for setting the criteria for generating and verifying carbon credits.

1. Regulated Markets: Some countries or regions have established cap-and-trade systems. In this system, a cap is set on GHG emissions, and companies receive or buy permits to emit CO2. If a company reduces its emissions beyond what's required, it can sell the excess permits to other companies that haven't met their targets. The European Union Emission Trading System (EU ETS) is an example.
2. Voluntary Markets: Companies or individuals can buy carbon credits voluntarily to offset their own emissions and demonstrate environmental responsibility. This can be done for corporate image reasons, to meet stakeholder expectations, or to prepare for future regulations.
3. Brokers and Trading Platforms: Just like in other financial markets, there are intermediaries and electronic platforms that facilitate the buying and selling of carbon credits.

In summary, carbon credits play a fundamental role in global efforts to limit GHG emissions and mitigate climate change. They provide a financial incentive for the implementation of projects that reduce or capture emissions, and a mechanism for companies and governments to achieve their carbon reduction targets in a cost-efficient manner.