Net Zero Pledges 2022: Climate Targets are “Unacceptably Low”

/in /by

An inventory of net zero pledges found gaps among the world’s biggest companies in their promises to reduce GHG emissions.

The Net Zero Tracker reported its latest review of climate pledges from nations, regions, and corporations. The initiative noted huge year-on-year increases in the number of entities that have made promises to cut their GHG emissions.

But an in-depth assessment revealed some shortcomings in those climate promises. For instance, in almost half of the cases, companies expressed plans to reduce emissions to net zero but without clear details on how.

Net Zero Tracker examines publicly available data for about 200 countries and large public companies. It’s run in part by the UK-based Energy and Climate Intelligence Unit (ECIU) and the University of Oxford.

Their 2022 annual inventory report covered 702 companies with net zero targets.

Net Zero Pledges Report Key Findings

The Net Zero Tracker report analyzed the net zero pledges of businesses and governments. It involves published plans on how they will achieve their goals, actions they are currently taking, and published progress reports.

Notably, the report found that firms responsible for high levels of emissions (oil companies) were more likely to declare net zero plans.

But only 38% of all those firms studied said their emissions reductions will cover all “Scope 3” emissions. Scope 3 emissions include the emissions produced by the end-use of a company’s product. It’s an important factor when assessing the climate impact of firms that produce oil, gas, and coal.

Here are the other major findings of the net zero pledges inventory for 2022.

Fossil fuel firms had the 2nd highest percentage of net zero goals, at 49% of the total.
Carbon offsetting or buying carbon credits for emissions reduced elsewhere is found dominant among corporate strategies.
About 40% of the Forbes 2000 companies with a net-zero target plan to use offsets, despite concerns about the lack of regulation.
702 companies on the Forbes Global 2000 now have net zero targets, up from 417 in 2020.
But 65% of those firms show lacking clear information about the GHG being measured, or how much they intend to rely on carbon offsets to meet their targets.
There’s a dramatic increase in the number of national laws and policies covering net zero targets. These went from covering 10% of national GHG emissions in 2020 to 65% in June 2022.
The number of big cities with a target doubled, up from 115 in 2020 to 235 now. But 900 large cities worldwide still have no net zero targets.

Given that analysis, John Lang, one of the authors noted that governments need to have legal standards and regulations in place to ensure net zero progress by companies. He also added that:

“At the moment, companies are confused about what’s needed from them… They don’t know what information has to be disclosed… We have to have mandatory, top-down regulations to guide them.”

Another author remarked that corporate ambitious interim targets are vital to delivering net zero and limiting cumulative emissions. He said that:

“Clear interim targets can be the solution to both the climate and energy crises; by providing the guardrails to accelerate the shift away from fossil fuels.”

Corporate Net Zero Commitments

During the Glasgow conference (COP26) last year, the UN formed an expert group to come up with net zero standards for the private sector. 

Article 6 of the Paris Agreement is at the top of each nation’s agenda at COP26. It governs the structure of carbon offsets and carbon credits as part of climate goals.

Large companies have been setting ambitious net zero pledges such as these major airlines, Chevron, Del Monte Foods, Disney, Stellantis, and more.

Some follow the world’s target to hit net zero emissions by 2050 while others set targets 10 years earlier. 

The firms believe that they have lofty climate goals already. But the report asserted that most of them have “unacceptably low” targets to be carbon neutral by 2050. Their long-term plans will not do much to halve emissions in the next 8 years that’s vital to stem climate change.

The diagram below shows the state of corporate climate commitments.

To help encourage action on corporate net zero targets, the UN again launched a group aimed at businesses, investors, cities, and regions last March 2022.

The goal is for the entities to make transparent and credible targets with stronger standards. It’s also to speed up the implementation of those plans.

Other initiatives were in a place like increased financial reporting requirements to boost and guide corporate net zero pledges. Examples are the Taskforce on Climate-Related Financial Disclosures and the proposed rules by the Securities and Exchange Commission.

Here’s the per sector ranking in terms of the most net zero pledges:

hospitality
fossil fuels 
materials such as steel and cement, 
transportation, 
food & beverage and 
agriculture

The UK and Italy have the most companies with at least some net zero goals like 72% and 70% of their businesses have targets, respectively. But in the U.S., only 36% of companies have made at least some net zero initiatives.

Despite flaws and credibility gaps, one more author stated that it’s still possible that the flood of net zero promises can create a virtuous cycle. According to him:

“It requires companies to step up, regulators to step up, civil society to be ready and researchers so that this really improves over time.”

The Net Zero Tracker 2022 report analyzed the inventory of net zero pledges from its database of more than 4,000 entities.

The post Net Zero Pledges 2022: Climate Targets are “Unacceptably Low” appeared first on Carbon Credits.

Best Ways Companies Can Cut Carbon Emissions (3 Tips That Work)

/in /by

In today’s hotter world, reducing carbon emissions has been the name of the game for everyone. So how does this apply to businesses?

An increasing number of companies are looking at ways to reduce their carbon footprint as climate change becomes a major threat to the earth.

There are over a thousand businesses that measured and reported their CO2 footprint. Most of them also set targets on how to cut down their emissions.

And if you’re also thinking about how your business can cut its own carbon emissions, then this guide will help you. You’ll learn the 3 best ways and some common initiatives under them that work in reducing corporate carbon emissions.

But first things first, why it’s a must to reduce emissions?

Why Companies Must Cut Carbon Emissions?

With mounting pressure from stakeholders and regulators, the number of firms finding means to reduce their emissions will rise even more this decade.

The effects of carbon and other greenhouse gas emissions from human activities are getting worst. Rapidly changing weather patterns and rising temperatures are undeniable. We can feel them.

Climate scientists can also measure them. In fact, the total GHG emissions we dumped into the air reaches 36.3 gigatonnes (Gt) in 2021 (up 6% from 2020 levels). They’re from CO2 emissions by energy combustion and industrial processes.

To make it clearer, the chart below plots the increasing trend of human-caused CO2 emissions from 1900 up to 2021.

Source: IEA, 2022

Carbon emissions have a lasting negative impact on our living environment. And if we do nothing about it, we’re putting the world at risk of immense climate effects.

So slashing emissions is critical, particularly for companies in the high emitting sectors. And so the Paris Agreement obliged businesses and governments alike to strive to reach net zero emissions by 2050.

Being at net zero emissions means the GHG emissions released by humans into the air are balanced by the emissions removed from the air.

In other words, getting to net zero means entities can still generate some emissions. But as long as they are offset by initiatives that reduce GHG already in the air. Otherwise, the world will see more severe weather changes and their drastic effects.

So, here are the top 3 tips that work for companies wanting to cut down their carbon emissions to fight climate change.

Option #1: Avoiding Emissions

Avoiding carbon emissions is different from reducing them. The former involves preventing carbon or its equivalent from entering the atmosphere while the latter means opting for ways that lower the amount of CO2 emitted.

Here are some of the widely used initiatives for businesses to avoid emissions.

Shifting to Renewable Energy

A big chunk of the greenhouse gases that blanket the Earth is due to energy production. In particular, it’s by burning fossil fuels to produce electricity and heat.

Fossil fuels like oil and gas are by far the largest contributor to climate change. It accounts for over 75% of global GHG emissions and nearly 90% of all CO2 emissions.

And so stopping the use of fossil fuels to generate electricity and power is a must for the world to cut back emissions.

Shifting to the use of renewable energy offers the best solution to that and there are great reasons why.

Renewable energy sources are abundant. Renewable energy sources – the sun, wind, water, waste, and heat – are available in all countries. Meaning businesses can easily tap them.

In fact, preferring renewable sources of energy can help companies deal with import dependency on fossil fuels. This is especially true in the case of European firms that heavily rely on oil and gas imports from Russia.

So companies will not only cut their carbon emissions but can also diversify their business economies.

Renewable energy is cheaper. Renewable energy also is the cheapest power option in most parts of the world today. In fact, prices for renewable energy technologies are falling rapidly.

The cost of electricity from solar power fell by 85% between 2010 and 2020. Meanwhile, costs of onshore and offshore wind energy are also down by 56% and 48% respectively.

Falling prices make renewable energy even more attractive for companies to invest in.

More importantly, cheap electricity from renewable sources can provide 65% of the world’s total electricity supply by 2030. It can also decarbonize 90% of the power sector by 2050, massively cutting carbon emissions.

Here’s how much GHG emissions are avoided by using renewable energy sources.

Source: German Environment Agency, 2022

Billions of dollars were invested by large companies already transitioning their energy production using renewables.

Using Clean Hydrogen

Same with renewable energy use, clean or low-carbon hydrogen also plays a vital role in achieving corporate net zero emissions. It’s reflected in its growing share in cumulative emission reduction capacity, representing 6% of total cumulative emissions reductions.

Here’s the projected global hydrogen demand by sector in the Net Zero Scenario from 2020 to 2030 in metric tonnes.

NZE = Net Zero Emissions by 2050 Scenario

Currently, hydrogen is mainly used in the refining and chemical sectors. Clean hydrogen (produced using renewables), in particular, can help decarbonize firms operating in various sectors. These include companies in long-haul transport, chemicals, iron, and steel, where avoiding emissions is difficult.

Hydrogen can also support the integration of variable renewables in a firm’s electricity system. After all, it’s one of the very few options for storing to store electricity over days, weeks, or even months.

Scale-up will be crucial to bringing down the costs of technologies for producing and using clean hydrogen, such as electrolyzers, fuel cells, and hydrogen production with carbon capture, utilization, and storage.

Other CO2 Emission Avoidance Strategies

For other types of companies, reducing food waste in production is another proven way to cut carbon emissions.

Take for instance the case of Del Monte Foods that’s operating in the food industry. A big part of its net zero initiatives is reducing food waste which involves diverting over 25 million pounds of food from landfills.

Such effort can help avoid emissions. In fact, the EPA estimated that each year, food waste in the US alone represents 170 million tons of CO2e emissions. That is equal to the annual CO2 emissions of 42 coal-fired power plants.

So, a simple yet impactful way of cutting food waste also helps businesses in avoiding the release of CO2 into the atmosphere.

Option #2: Reducing Emissions

Improved energy efficiency has become a key component of corporate climate change and net zero strategies. Most companies pledge to double their energy productivity (dollar of output per unit of energy). This has the potential to save more than $2 trillion globally by 2030.

Large firms that give more attention to energy efficiency report billions of dollars in savings and millions of tons of avoided carbon emissions. Efficiency strategies can encompass internal operations, supply chains, products and services, and cross-cutting issues.

Usually, businesses can become more energy efficient by determining their overall carbon footprint first. Only then they can plan for ways how to cut back on their footprint accounting for huge emissions.

Some examples of how to reduce emissions through energy efficiency include:

Making offices smarter (reducing scopes 1 & 2). This initiative involves using fewer resources and energy-efficient lighting and HVAC systems. It allows a company’s building offices to reduce their carbon footprint.
Managing technology sustainably (reducing scopes 1, 2). An example of this is developing and delivering sustainable IT solutions. Areas to explore are e-waste recycling, maintaining energy-efficient data centers, and reducing physical infrastructure.
Greening pantries (reducing scope 2). Stop single-use plastics in office pantries and ask workers to bring their own water bottles and mugs.
Adding automation and other technologies that reduced waste and improve production efficiency. An example is installing a water recycling system that reduces energy and water use.
Reducing packaging footprint. The goal of this initiative is to use lower pounds of materials for packaging while opting for a packaging design that uses more recycled materials.

Corporate energy efficiency strategies are most effective when they become an integral part of the firms’ strategic planning. And if the company invests substantial resources into efficiency measures.

Liquefied Natural Gas

With the world’s move to phase out fossil fuels, particularly that of the EU bloc, more attention is given to liquefied natural gas (LNG).

LNG is by far the cleanest fossil fuel; it emits the least amount of CO2 into the air when combusted.

In the context of the current energy transition, LNG represents an excellent alternative fuel to reduce emissions and help combat global warming.

By opting for LNG – particularly for the industry and transport sectors – companies can significantly cut back their carbon emissions.

Major oil firms like Shell, Chevron, Total, ExxonMobil, and others have been considering using carbon neutral LNG.

In comparison with diesel, LNG provides the following reductions in various GHG emissions:

a 25% reduction in carbon dioxide (CO2),
an 80% reduction in nitrogen oxide (NOx), and
a 97% reduction in carbon monoxide (CO) emissions.

Likewise, a thermal power plant fuelled by natural gas rather than coal can achieve these massive emissions reductions:

an 81% reduction in carbon dioxide (CO2),
an 8% reduction in nitrogen oxide (NOx), and
a 100% reduction in sulfur (SO2) and fine particle emissions.

Estimates also show that LNG costs less than other fossil fuels. As such, the use of this fuel will be more widespread as firms strive to reduce emissions and reach net zero targets.

Companies in the aviation, logistics, and shipping industries will greatly benefit from preferring LNG over oil or coal.

Apart from LNG, firms can also use other alternatives like lower emissions fuel, biofuels, and bio components in making products. The goal may not be to totally avoid emissions but the amount of carbon and other GHG emitted is lower.  

For business operations where carbon emissions are not possible, the last way offers companies a great option to deal with CO2 footprints: carbon offsetting.

Option #3: Offsetting Emissions

If avoiding or directly reducing emissions is not possible, companies can offset their footprint by buying carbon credits.

Carbon offsets are tradeable credits that prove that one ton of CO2 or its GHG equivalent has been removed from (or not released into) the atmosphere.

One carbon offset = one metric ton of carbon or other (GHG).

Offset credits are available both in the compliance (regulated) and voluntary carbon market (VCM).

Offsets in the compliance market are born out of the laws mandating emission reductions. It’s managed by emission trading systems (ETS) such as the EU ETS.

On the other hand, offsets in the voluntary market are created through various projects that reduce or remove CO2 from the air. In 2021, annual credit generation in the VCM was a record $1 billion.

Firms can choose from different types of projects that produce carbon offset credits. Common examples include the following:

Carbon reduction offsets:

Community-based energy efficiency: bio-based energy sources like biogas and clean cooking solutions.
Renewable energy: replacement for fossil fuel energy sources (hydro, solar, wind, and geothermal).
Forestry-based avoidance (REDD+): management and conservation of forests to cut emissions.

Offsets from carbon removal:

Afforestation/reforestation
Soil carbon sequestration
Blue carbon habitat restoration
Technological removal and storage/use
Direct air capture (DAC) and storage/use
Biochar
Bioenergy with carbon capture and storage (BECCS)

Carbon credit offsets can also have co-benefits such as job creation, water conservation, flood prevention, and preservation of biodiversity.

To ensure the quality of the credits, third-party certifying bodies like Verra and Gold Standard verify the offset projects.

There are numerous top carbon exchanges that companies can tap to buy credits to offset their emissions. The exchanges work the same way as different stock and commodity exchanges.

Almost all Fortune 500 companies have been offsetting their carbon emissions by buying credits from various projects around the world. In fact, carbon offset credits form a big part of their path to net zero emissions.

Billions of dollars have been invested in those projects that generate carbon offsets to help firms reduce their hard-to-abate footprint.

So, if you’re company is looking to cut down carbon emissions, you can try one or two, or even all the options mentioned here. They’re all proven to work in helping businesses abate their carbon footprint.

You can further learn how offsetting emissions works in this guide. Or you can know more about which carbon offset credits are the best to buy here.

The post Best Ways Companies Can Cut Carbon Emissions (3 Tips That Work) appeared first on Carbon Credits.

Saudi Aramco Net Zero Goal by 2050, with 16 Million Carbon Credits/Offsets

/in /by

Saudi Aramco published its first sustainability report that outlines ways how it can reduce its emissions, including 16 million carbon offsets.

The world’s biggest oil company detailed its plan and strategies on how to abate its carbon emissions in its first-ever sustainability report.

The report also reveals the company’s interim climate targets to achieve by 2035. And a big part of that goal is to use 16 million carbon credit offsets or metric tons of CO2e each year.

Before releasing the report, the oil firm announced its ambition to reach net zero Scope 1 and 2 emissions by 2050.

At a glance, here are Aramco’s primary climate goals:

Produce 11 million mt/year of blue ammonia by 2030
Reduce more than 50 million mt of CO2 equivalent annually by 2035
Reach net zero Scope 1 and Scope 2 emissions from its assets by 2050

Aramco’s Upstream Carbon Intensity (Scope 1 and 2 Emissions)

Saudi Arabia, the biggest oil exporter, made a pledge to have net zero emissions by 2060, 10 years later than Aramco’s goal.

Aramco is now rapidly reducing its GHG emissions. At the same time, ramping up its most sustainable capacity for crude oil (from 12 million b/d now to 13 million b/d by 2027).

The firm’s chairman Yasir al-Rumayyan stated in the report:

“Reducing emissions from energy production and use, while at the same time satisfying the world’s growing energy requirements, is the biggest dual challenge facing our industry.”

Saudi officials believe that demand for the country’s crude will remain strong. That’s because the country enjoys low cost and low carbon production.

Aramco aims to reduce its net Scope 1 and Scope 2 emissions by 52 million mtCO2e annually by 2035.

Right now, here’s the oil major’s Scope 1 and 2 GHG emissions.

To cut down these upstream emissions, Aramco is making use of the Circular Carbon Economy framework. It focuses on reducing, reusing, recycling, and removing GHG emissions. Under this model, the firm aims to achieve emissions reduction by 2035 with these interim targets:

Renewables investment: 14 million Mt of CO2e reduction/year
Carbon Capture, Utilization, and Storage (CCUS) investment: 11 million Mt of CO2e reduction/year
Energy efficiency improvements: 11 million Mt of CO2e reduction/year
Methane and flaring reduction — 1 million Mt of CO2e reduction/year
Carbon credit offsets — 16 million Mt of CO2e mitigation/year

The company also plans to further reduce its upstream carbon intensity despite being the lowest in the industry.

It seeks to cut it by 15%, from 10.2kg CO2 equivalent per barrel of oil equivalent (boe) to 8.7kg of CO2e/boe by 2035.

When it comes to Scope 3 emissions (supply chain and customers’ use of products), Aramco has not reported it yet. But the firm is investing in hydrogen and renewable energy sources that support customers to access lower carbon products.

The report also outlines the oil giant’s focus on developing its blue ammonia and hydrogen business. In particular, it seeks to produce up to 11 million metric tons of blue ammonia per year by 2030.

The goal is to support emissions reductions in hard-to-abate sectors like heavy-duty transport, heating, and industrial applications.

Aramco’s Carbon Credits and Offsets

Aramco will further cut its emissions by 14% in 2035 by investing in projects that produce up to 16 million carbon offsets annually.

Carbon offsets refer to the units of carbon credits that Aramco plans to earn through emission reduction projects. One carbon credit equals one metric ton of GHG emission removed or avoided.

The use of offsets is an important part of Aramco’s net zero goal as they enable the mitigation of hard-to-abate emissions.

By buying carbon credits in the carbon market, the firm can offset its emissions in reduction elsewhere. In effect, the carbon credit offsets allow Aramco to speed up its reduction efforts.

In 2021, Aramco’s Scope 1 emissions jump by 4% after the start-up of its Fadhili Gas plant. Meanwhile, the company saw a 14% drop in Scope 2 emissions due to a shift in consumption of electricity from third-party to company-owned power generation.

Aramco is now exploring the use of natural climate solutions to generate carbon credits. In fact, it partners with Public Investment Fund (Saudi Arabia’s wealth fund) to be the first member of the Riyadh Voluntary Exchange Platform.

The platform is where trading of carbon credits and offsets will happen in the Middle East and North Africa. This MENA voluntary carbon market (VCM) which Aramco is part will take off next year.

The initiative is timely as it can tap the growing demand for carbon credits (offsets) in the VCM.

Aramco said in its report that carbon credits are vital in their journey to reach net zero emissions by 2050. Their use will help the company reduce emissions and be more sustainable.

The post Saudi Aramco Net Zero Goal by 2050, with 16 Million Carbon Credits/Offsets appeared first on Carbon Credits.

PG&E Net Zero Emissions Pledge by 2040, Reveals “Scope 4” Emissions

/in /by

The U.S.’s largest utility, Pacific Gas and Electric (PG&E), revealed its multi-decade pledge that aims to rapidly reduce its GHG emissions and reach net zero by 2040 while still using natural gas to produce power.

PG&E net zero pledge is five years earlier than the goal of its home state of California.

The utility’s climate strategy also calls for more ambitious interim 2030 goals and long-term targets. At a glance, here’s how the company commits itself to heal the planet:

A climate- and nature-positive energy system by 2050
A net zero energy system in 2040
A series of 2030 climate goals to reduce PG&E’s operational carbon footprint and enable customers and communities to reduce their carbon footprints:

Reduce Scope 1 and 2 emissions by 50% from 2015 levels
Reduce Scope 3 emissions by 25% from 2015 levels
Achieve “Scope 4” goals to enable customer emission reductions

PG&E Net Zero Pledge: 2030 Climate Goals

With 16 million customers across California, PG&E supplies more people than any other utility in the country. Its climate goals are among the most ambitious laid out by major investor-owned utilities.
 
And that’s partly because the state already has set bold clean energy laws. It requires utilities to get 100% of electric power from non-carbon sources by 2045, for instance.
 
PG&E is deploying various strategies to reduce its Scope 1 and 2 emissions by 50% from 2015 levels. Its strategy is to reduce emissions from the energy delivered through its wires and pipelines while increasing electrification technologies and value for its customers.
 
The following table enumerates the climate strategies that the firm is doing.
 
Scope 1 represents direct emissions from PG&E’s operations. While Scope 2 refers to indirect emissions from facility electricity use and electric line losses.
 
PG&E expects its output of natural gas will go down by 40% by 2030 compared to 2015 levels. Still, the utility will keep its three gas-fired power plants in operation.
 
When it comes to its Scope 3 and 4 emissions, the firm is taking a strategic, collaborative approach to reduce them both.

“Scope 4” emissions is an emerging term for categorizing emission reduction enabled by the company.

PG&E Scope 4 goal to enable further emission reductions and support the state’s climate goals is through:
Offering energy efficiency and electrification programs
Unleashing the full potential of electric vehicles and
Converting industrial and large customers from high carbon-intensity fuels to natural gas
The utility firm sets the following targets for its Scopes 3 and 4 interim net zero pledge.

PG&E Climate Strategy and Carbon Credits

PG&E supports and takes part in the California Climate Credit. It’s from a state government program that requires power plants and natural gas providers that emit GHG to buy carbon permits from auctions managed by the California Air Resources Board (CARB).
 
The program is part of California’s cap-and-trade program. It encourages major utility providers like PG&E to shift toward clean sources of energy. These include solar, wind, geothermal, hydro, and other renewable resources.
 
When the utility firm sells electricity and natural gas to customers, it pays the pollution permits (credits) associated with customer burning of its fuels and passes the costs on through customers’ bills.

This permit to pollute says that when firms went over their allowed (cap) emissions, they’ll pay a fee for every metric ton of carbon above what they’re allowed to emit.

The pollution costs appear in all customers’ utility bills, more so in the part of electricity bills that represents the costs to generate electricity.
 
The climate credit program is expected to continue through 2030, the same period when PG&E seeks to achieve its interim climate targets.
 
PG&E net zero pledge involves Scope 4 efforts that associate with the climate credit program. The company can make a significant contribution by enabling Scope 4 emission reductions. This is through customer energy efficiency and electrification measures.
 

2040 and 2050: Net Zero Emissions and Climate-Positive Energy Future

Building upon its 2030 climate goals, PG&E will work to achieve net zero emissions by 2040 by eliminating or reducing emissions and then removing the remaining carbon from the air. By 2050, the utility firm plans to remove more GHG than it emits.

PG&E is uniquely positioned to lead the energy transition with customers at the center as being a dual commodity utility provider. To make this happen, the company will use a diverse mix of resources:

Broad electrification
Cleaner fuels ex. renewable natural gas and hydrogen
Nature-based solutions
Carbon capture, storage, and utilization

With this, PG&E aims to evolve the gas system to be an affordable, safe, and reliable net zero energy delivery platform.

Last year the utility got about 50% of its electricity from renewable sources like solar and wind. Another 39% came from the Diablo Canyon Nuclear Power Plant, which is set to shut down in 2025.

To make up for that lost power, the utility is investing in more battery storage so it can save excess solar power produced during the day for use at night.

PG&E CEO, Patti Poppe said about the utility’s net zero pledge in its climate strategy report:

“At first glance, meeting these milestones may look to be an extraordinary challenge. But extraordinary times call for extraordinary measures… We need to put the climate machine into reverse and begin undoing the damage. This [climate] report represents PG&E’s bold plan to do just.”

The post PG&E Net Zero Emissions Pledge by 2040, Reveals “Scope 4” Emissions appeared first on Carbon Credits.

US Senate Bill Pushes Military to Buy Electric Non-tactical Vehicles

/in /by

U.S. Democratic senators introduced a new bill that will force the military to speed up its efforts to use electric non-tactical vehicles.

Sens. Elizabeth Warren and Mazie Hirono plan to introduce the Military Vehicle Fleet Electrification Act.

Their proposed legislation requires that 75% of the Pentagon’s non-tactical vehicle purchases in 2023 be electric or zero-emissions.

The Military’s GHG Emissions

According to research, the US military is a major polluter, and since 2001 has produced more than 1.2 billion metric tons of GHG.

That means the military emits more than what the entire countries like Denmark and Portugal do.

Also, the Pentagon accounts for 56% of the government’s GHG emissions, according to the White House.

The bulk of military emissions come from its operations – moving people and things around. Plus, it also owns a lot of property and has many buildings to heat and power.

The US Army’s climate plan, unveiled earlier this year, seeks to achieve a 50% reduction in Army net GHG emissions by 2030, compared to 2005 levels. And it aims to hit net zero GHG emissions by 2050.

In particular, it seeks a fully-electric non-tactical fleet by 2035. It’s also planning for an all-electric, light-duty, non-tactical vehicle fleet by 2027. While it aims to have fully-electric tactical vehicles by 2050.

The Department of Defense is exploring hybrid and fully-electric technology to be used on the battlefield.

Right now, the military is researching the potential of hybrid-electric drive for its tactical vehicles.

In fact, the DoD plans to test the performance of its first hybrid Bradley Fighting Vehicle in Arizona later this year.

It also has electrification works underway for Humvees and Joint Light Tactical Vehicles.

According to Sen. Warren:

“Transitioning the military’s non-tactical fleet of vehicles to electric or other zero-emission vehicles would have a significant impact on the U.S. government’s greenhouse gas emissions… This is an effective solution that helps us tackle the climate crisis and keeps the military ready for the future.”

The Bill for Military Electric Non-tactical Vehicles

The Senate bill will be a companion to a House bill introduced in April by Rep. John Garamendi, the House Armed Service Committee’s Readiness subcommittee chair.

It is co-sponsored by Sen. Dick Durbin, Sen. Sheldon Whitehouse, Sen. Ed Markey, and Sen. Angus King.

The DoD’s interest in hybrid and fully-electric vehicles for all its non-tactical and tactical fleet is obvious.

And that’s not only because of their environmental benefits but also of their operational advantages. This includes the ability to move more silently, for instance.

The proposed climate law covers cars, vans, and light-duty trucks (non-tactical) that the department buys or leases itself. It also applies to leases from the General Services Administration.

At the present, the DoD has an inventory of over 174,000 non-tactical vehicles. While its tactical fleet has over 250,000 units.

One of the biggest challenges the department faces with electrifying its tactical fleet is having its tactical recharging capabilities on the battlefield.

But its climate strategy claims that the military service desires to devise a tactical recharging solution by 2050.

And so, the proposed law will allow the DoD to build electric charging stations at its installations. Also, it will require the Pentagon to use only non-proprietary, interoperable charging ports and connectors.

Interestingly, the bill demands that the sources for electric batteries would be from the US or its allies. It prohibits sourcing from what the bill called “hostile nations” (ex. China or Russia).

Garamendi said when introducing the bill:

“Transitioning the military’s enormous fleet of passenger cars, light-duty trucks, and vans with internal combustion engines to American-made electric and zero-emission vehicles is a common-sense way to reduce emissions.”

The bill for military electric vehicles is endorsed by these environmental groups.

Securing America’s Future Energy (SAFE)
National Electrical Contractors Association
Natural Resources Defense Council
National Mining Association
International Brotherhood of Electrical Workers
E2 (Environmental Entrepreneurs)

The target date for the ambitious bill to take effect is at the start of fiscal 2023, or October 1, 2022.

The legislation follows other recent actions by lawmakers to abate the military’s impact on the environment.

The post US Senate Bill Pushes Military to Buy Electric Non-tactical Vehicles appeared first on Carbon Credits.

Verra To Release Methodology For Biochar Carbon Credit Projects

/in /by

Verra, the biggest carbon registry, is set to release a new methodology for biochar projects, quantifying their climate benefits and creating nature-based carbon removal credits.

Biochar is a solid material that has high levels of carbon. It’s made from feedstock biomass that offers compelling climate benefits.

Biochar is commonly used in agricultural applications as it can improve soil nutrients to increase crop yield. In general, biochar applications can increase soil CO2 emissions.

But biochar can also boost soil carbon sequestration and reduce GHG emissions.

As per IPCC 6th Assessment Report, soil carbon management in agriculture like biochar projects can reduce about 1.8 to 4.1 gigaton/year of CO2.

Verra’s New Biochar Methodology

Verra helps scale up climate action outcomes by driving large-scale investment in projects that reduce emissions.

It plans to release its biochar GHG accounting methodology in July. It will help biochar project developers in generating carbon credits to attract investments.

The international registry started devising the framework in 2020. The certifier noted that “biochar can contribute significantly to climate change mitigation when deployed at a massive global scale.”

Biochar is a stable source of carbon because microbes find it very tough to break down. When incorporated into soils, it is 10x to 100x more stable than the feedstock from which it’s made of.

That means the carbon contained in biochar is not likely to degrade to CO2 to the same extent as other organic materials.

In fact, biochar incorporated into soils can store carbon for decades to millennia.

In particular, a study estimates that biochar can sequester as much as 2 GtCO2 per year by 2050 at a cost of $30–$120 per ton of CO2.

Biochar also offers agricultural benefits such as increased aeration and water holding capacity.

Yet, there hasn’t been enough market incentive to scale its application to the levels that can help tackle climate change.

Accordion to Liz Guinessey, a manager at Verra:

“Generally, the process of going through and producing biochar doesn’t really provide enough incentive… However, the carbon sequestration potential certainly does incentivize that.”

Biochar and Carbon Credits

Carbon credits produced by biochar projects are part of the nature-based removal category. They specifically fall under hybrid carbon removal projects.

Last March, Nasdaq launched 3 carbon removal price indexes, which are based on Puro.earth Carbon Removal Certificates (CORCs).

One of them is the CORCCHAR – or the CORC Biochar Price Index for biochar. CORC refers to the tradable digital asset representing a ton of carbon removed from the air.

Biochar carbon credits are typically priced in the range of $3 to $20+ per MtCO2e. But some biochar projects have sold credits for $110/tCO2e.

Biochar credits are also one of the components of Platts Nature-Based Removal price assessments along with other nature-based projects. These include reforestation, afforestation, and mangrove projects.

Verra’s biochar methodology provides a framework for quantifying emission reductions and removals from:

Improved waste handling practices that result in the production of biochar from feedstock biomass;
The use of biochar in soils; and
Certain non-soil material applications such as cement or asphalt.

The framework comes after a consensus that surrounds biochar and its ability to sequester carbon for a very long period of time. And Verra was prompted into developing it after getting persistent requests from potential biochar project developers.

The approval process for publishing the biochar methodology is rigorous. It involves multiple stages with participation from various groups.

When released, it will enable both soil and non-soil biochar projects to make nature-based carbon credits.

It will also allow for a diverse range of biomass products as sources of feedstock. That’s as long as biochar projects can verify that the biomass would otherwise be wasted.

Verra’s biochar methodology and its accounting framework will reveal carbon impacts up and down the biochar value chain. That’s from feedstock sourcing to the final biochar application stage.

Other monitoring mechanisms will also be in place to protect against risks of carbon sequestration reversal.

As per Verra:

“We do expect to have a pretty robust pipeline of projects as soon as the methodology is approved.”

The biochar methodology was put together by Verra with Forliance, South Pole, and Biochar Works.

The post Verra To Release Methodology For Biochar Carbon Credit Projects appeared first on Carbon Credits.

Congress Introduces US CBAM: The “Clean Competition Act”

/in /by

A US version of the Carbon Border Adjustment Mechanism (CBAM) was introduced in Congress by Senator Whitehouse and colleagues to boost domestic manufacturers and address climate change.

The Clean Competition Act is legislation aimed at making domestic companies in the US more competitive in the global market. The bill is also for tackling the key sources of GHG emissions.

The US CBAM proposal aims to help reduce emissions across carbon-intensive industries at home and abroad.

The legislation is cosponsored by Senators Chris Coons, Brian Schatz, and Martin Heinrich.

Why Introduce US CBAM Bill?

A CBAM is an environmental trade policy that sets fees on imports from high-polluting sectors.

The Clean Competition Act is a form of CBAM that aims to promote decarbonization in the US. It’s similar to the EU CBAM in that they both will give the revenues to developing countries, for example. They also introduce charges for CO2 emissions for imported goods coming into each country.

But the US CBAM is unique in that it levies a fee for emissions not only for importers but for domestic manufacturers, too.

Also, instead of an economy-wide fee, domestic companies will pay the carbon price only on emissions that go beyond the industry average.

The bill’s key author, Sen. Whitehouse, said that it’s also to comply with the World Trade Organization protectionism rules. He stated that:

“This is an effort at carbon pricing, having there be a cost for polluting, but it’s probably a considerably easier lift than a full-on carbon price.”

He further commented that American manufacturers doing the right things on climate are often at a disadvantage compared to foreign competitors.

And so the bill is to make them become competitive while helping steer the planet to climate safety.

American manufacturers are on average less carbon-intensive than most of their foreign competitors. In particular, the U.S. economy is almost 50% less carbon-intensive than its trading partners like China (3x more) and India (4x more).

Sen. Coons on the US CBAM bill:

“I’ve been a longtime advocate of border carbon adjustments because they will lower carbon emissions around the world. This and providing a competitive advantage to American companies doing their part to address climate change.”

Coons also said that aligning US climate and trade policies with its allies will help the nation reduce both its emissions and reliance on foreign fuels.

What are the Main Provisions of the Act?

The Clean Competition Act would impose a carbon border adjustment on energy-intensive imports.

The starting price of carbon will be $55/t and will be up by 5% above inflation each year. Domestic producers of raw materials covered by the proposed US CBAM will receive export discounts. While covered imports from least developed countries would be exempt from any tax charges.

Starting in 2024, the adjustment would apply to carbon-intensive products of domestic producers and importers. These include the following:

fossil fuels
refined petroleum products
petrochemicals
fertilizer
hydrogen
adipic acid
cement
iron and steel
aluminum
glass
pulp and paper
ethanol

On the other hand, the EU CBAM applies to the import of electricity and 5 major goods only. These are steel, iron, cement, fertilizer, and aluminum sectors.

In 2026, US CBAM would be extended to include imported finished goods containing at least 500 pounds (226kg) of covered energy-intensive primary goods.

In 2028, the minimum amount of raw materials for coverage would be down to 100 pounds.

Calculating how much the taxpayer would pay depends on various factors.

Here’s how the calculation is done:

Importers would only pay the levy based on the fraction of emissions that exceed the comparable U.S. carbon intensity baseline.

To get the baseline, the subjected producers must submit data to the US Treasury. However, that’s not a replacement but an addition to the annual GHGRP (EPA’s Greenhouse Gas Reporting Program) CO2 emissions report. The data for submission include:

CO2 emissions,
annual electricity consumption and
annual primary output.

Based on the reported information, the Treasury computes the average carbon capacity under Scopes 1 and 2 for each carbon-intensive industry.

At the same time, the baseline indicators will decline by 2.5% annually from 2025 to 2028. Periods after that will see a 5% decrease in US CBAM price annually.

Lastly, 75% of revenues raised each year by the tax would fund a competitive grant program for each of the covered industries. This will further stimulate investment in the new technologies necessary to reduce carbon footprint.

The remaining 25% of revenues will be for helping developing countries to decarbonize and reach net zero emissions.

Here’s the full copy of the introduced US CBAM, the Clean Competition Act.

The post Congress Introduces US CBAM: The “Clean Competition Act” appeared first on Carbon Credits.

VCMI Code Will Rank Companies Climate Goals Using Carbon Credits

/in /by

Voluntary Carbon Markets Integrity Initiative (VCMI) launched a draft code called Claims Code of Practice for using carbon credits, supported by the UK government.

The Claims Code aimed at standardizing definitions and reducing greenwashing in the VCM.

The code also seeks to help investors prove whether claims made by companies using carbon offsets are credible. It aims to bring transparency to an unregulated market.

Voluntary carbon credits enable companies to fund various projects to offset their emissions. For instance, nature-based solutions like forest preservation/restoration, renewable energy projects, or carbon capture and storage are commonly available.

Industry reports suggest that the VCM hit a record high of over $1 billion in 2021 and is on track to reach $50 billion in 2030.

Many believe that the use of offsets is necessary for companies to neutralize their hard-to-abate emissions. This is particularly crucial for carbon-intensive industries.

But there have been serious concerns about transparency and oversight in the VCM. And so, the code comes in to address these concerns.

The VCMI’s Claims Code for Carbon Credits

Many large companies such as Shell, Apple, Microsoft, Stellantis, Disney, and more have set net zero emission targets. They all said that they need to buy or generate carbon credits to offset residual GHG.

But some climate activists are questioning carbon offsets, saying they lack actions to achieve actual emissions cuts.

Hence, the VCMI developed a provisional Claims Code of Practice (or Claims Code) on credible use of carbon credits by companies and other market players.

The Code builds on the previous VCMI consultations. It further expands on the requirements of leading climate change initiatives.
During the code’s launch, VCMI’s director Mark Kenber said:

“Companies should follow the accepted mitigation hierarchy, which is to say they should reduce or remove all the emissions they possibly can within their value chains… Only once they’ve exhausted the possibilities to reduce those emissions, can they turn to the use of carbon credits to cover any remaining emissions…”

VCMI set three tiers for corporate offset claims: Gold, Silver, and Bronze.

VCMI Gold

This is the most ambitious category of ranking for a company to chase. Under this rank, companies must be on track to achieve their interim net zero targets for Scopes 1, 2, and 3 via emissions reductions within their value chain.

Companies also have to cover all (100%) remaining unabated emissions through the purchase and retirement of high-quality carbon credits.

Here’s an example of how a company can achieve VCMI Gold status.

VCMI Silver

Hitting this ranking means companies are on track to meeting their interim targets for Scopes 1, 2, and 3. They must also have offset at least 20% of their residual emissions by using carbon credits.

Here’s how a company can achieve VCMI Silver rank.

VCMI Bronze

Under this VCMI’s code ranking, companies must be on track to meeting their Scopes 1 and 2 emissions. They also need to offset up to 50% of their Scope 3 emissions required by their net zero interim targets.

VCMI Bronze companies also have to offset at least 20% of their remaining emissions. The carbon credits they bought will be retired in 2030 when they can now become VCMI Silver.

The diagram below shows how this ranking works.

VCMI Code Four Components/Steps

VCMI’s Code for using carbon credits in making claims is made up of four steps. Companies must adhere to all four components to make credible claims about their voluntary use of carbon credits.

Step #1. Meeting the prerequisites

The VCMI code requires that companies only use carbon credits in addition to (not as a substitute for) science-aligned decarbonization across value chains. The VCMI Prerequisites are in place to ensure that this is the case.

At this first step, firms must do the following before they can make any voluntary use of carbon credits to offset emissions.

Step #2. Identifying claims to make

VCMI Claims Code involves two different types of claims for recognizing achievements before companies meet their long-term net zero commitment. These are:

Enterprise-Wide Claims: representing achievement at the enterprise level as companies progress toward their net zero pledges.

Brand-, Product-, and Service-Level Claims: representing achievement across the full value chain of a specific brand (line of products or services), product, or service.

The claims are organized as a progression, following the widely accepted mitigation hierarchy. Priority must be given to decarbonization within company value chains over the use of carbon credits to cover excess emissions.

VCMI Gold is the highest-level claim.

Step #3. Purchasing high-quality carbon credits

All credits used as the basis for credible claims must be high quality and meet basic criteria. To meet the basic criteria for high-quality credits to any claim, the credits must be:

Associated with a recognized and credibly governed standard-setting body
High environmental quality
From activities that, where relevant, are compatible with human rights
From activities that, where relevant, promote equity, apply social safeguards, and demonstrate positive socioeconomic impacts,
From activities that, where relevant, contribute to the protection and enhancement of environmental quality

Overall, carbon credit purchases and the activities they support should result in positive outcomes for local communities and adhere to social safeguards.

Step #4. Reporting transparently on the use of carbon credits

To substantiate a claim, transparent reporting of the following information is vital:

Number of credits purchased and retired to make a claim; proportion used to cover emissions beyond a company’s targets; and proportion used to cover Scope 3 emissions in order to meet the target (for VCMI Bronze claim)
Certification standard name, project name, ID, and issuing registry for each credit used
Host country
Credit vintage
Methodology/project type

Beta Testing of VCMI’s Code for Carbon Credits 

A VCMI spokesperson suggests that investors can use the code to “scrutinize and benchmark claims made by the companies”.

VCMI is now seeking companies to beta test the code. Unilever, Google, and Hitachi are the first companies that commit to pilot the code.

Stakeholders can provide feedback about the code by 12 August. The final version of the carbon credits use standard for ranking companies in meeting climate goals is due in early 2023.

The post VCMI Code Will Rank Companies Climate Goals Using Carbon Credits appeared first on Carbon Credits.

Carbon Pricing Explained: How Carbon Credits, Carbon Offsets and Taxes are Priced

/in /by

Between talk of carbon credits, carbon offsets, and of course carbon emissions, it can feel like carbon is everywhere. But unless you understand carbon pricing, you’ll never understand how – and why – carbon markets work the way they do.

Let’s break down carbon pricing, starting with a simple question: why put a price on carbon at all?

Carbon Pricing Basics

There’s a real-world cost to carbon emissions. The various carbon pricing mechanisms exist to identify that price and (in some cases) to create a carbon market.

The problem lies in measuring carbon pollution and identifying the resulting environmental damage, much of which is tied only indirectly to carbon dioxide emissions.

Different carbon pricing instruments estimate the cost of carbon in slightly different ways. Most of the major carbon pricing tools also handle carbon revenues differently.

Estimating the Cost of Carbon Emissions

Beginning from 2010 to 2019, the average annual global GHG emissions were at their highest historical levels, as shown below.

The impact of human-caused CO2 emissions and other GHG emissions is widespread and varied. From global warming to shifting weather patterns, GHG emissions have a lasting negative impact on the environment.

In turn, those changes have knock-on effects, including:

Crop damage
Increased risk of fire and weather-related natural disasters
Heat waves and associated healthcare costs
Rising sea levels and increased risk of flooding

The key takeaway? Putting a price on carbon emissions forces people and companies to emit less carbon, assigning a real-world value to the social cost of CO2 emissions.

The Major Methods of Carbon Pricing

The goal of pricing carbon is to force entities to produce less CO2 and other greenhouse gas emissions (GHG). Most people agree on that point; the disagreement comes over which method of carbon pricing achieves that goal the best.

There are two primary carbon pricing instruments, along with several other secondary ones.

Primary Carbon Pricing Mechanisms

Carbon Tax

Governments love taxes. They bring in revenue, they’re easy to understand, and at least in theory, they’re easy to administer. Taxes are also a great control mechanism.

Increase the taxes on something, and you increase the price; increase the price, and fewer people will be able to purchase that item or use that service.

This idea isn’t new; it’s the same principle behind the so-called “sin tax.” Increase the tax on alcohol and cigarettes and you can, in theory, reduce the number of people who use them.

The “sin” idea came to be applied more generally to practices that have a negative social cost. For cigarettes, that’s an increased burden on the healthcare system; for alcohol, there’s disorderly conduct, healthcare costs, and even drunk-driving incidents.

Applying the same concept to carbon pricing initiatives makes sense. Carbon emission, for all the reasons listed earlier, has similar social costs.

By taxing the institutions that emit CO2, governments can reduce those negative impacts while also providing a revenue stream.

A carbon tax isn’t perfect. As a pricing mechanism, it’s fixed; adjusting a tax rate is a laborious and time-consuming process. And there’s no real way to respond to market demand.

Emissions Trading System

Building a system for trading CO2 emissions establishes a rudimentary carbon market. The market can set the price, at least within certain constraints.

At the same time, an ETS allows regulatory bodies to create a baseline price that increases over time – incentivizing decarbonization.

There are at least two basic approaches to an ETS. A cap-and-trade program sets an upper emissions limit and assigns carbon credits for emissions within those limits.

Companies that don’t use up all their emissions credits can trade their excess credits to other companies that would otherwise exceed the limit.

Baseline credit systems use a similar process in reverse. Carbon credits are dispersed only to companies that keep their emissions below a set baseline. Those credits can then be traded with companies that are above the baseline.

Other Carbon Pricing Mechanisms

In addition to a carbon tax and an emissions trading system, there are a number of carbon pricing mechanisms that tend to gather a bit less attention.

Internal Carbon Pricing

When companies calculate their own price for carbon emissions and build that into their planning, that’s an internal pricing mechanism. Internal carbon pricing provides the greatest flexibility for companies, but can also be the hardest to clarify or define.

Some recent initiatives, such as the Science-Based Targets initiative (SBTi) seek to provide some third-party guidance on this process.

In setting an internal carbon price, there’s a range of points to consider. It includes reviewing external risks and looking into the carbon tax risks in operating countries, where there can be variations.

The most important starting point if you’re considering internal carbon pricing is to understand your own business drivers for setting it.

Results-Based Climate Funding (RBCF)

Typically funded by various regulatory agencies or even non-governmental organizations, RCBF offers payments when certain emissions reductions have been reached.

By focusing on results that create incentives to take action – from planting trees to improving access to clean energy, RCBF can help cut emissions.

But for all its utility, this mechanism has been a complicated tool to use, putting off many would-be users. 

There’s a final method of carbon pricing that’s worth mentioning, having quickly become a multi-million-dollar market globally: offsetting.

Carbon Offsetting as a Pricing Mechanism

Carbon offsetting embraces a free-market approach to the carbon pricing problem. CO2 emissions are calculated by a tonne of C02, but offsets are given for preventing or removing CO2 emissions.

For example, planting a forest allows trees to absorb CO2 into their trunks; building a Carbon Capture and Storage (CCS) facility can pull CO2 straight from a factory’s exhaust and lock it away before it has a chance to enter the atmosphere.

Projects calculate the value of these offsets and then sell them on the open market to other companies who want to cover some of their own emissions.

If every tonne of CO2 produced by an entity is covered by an offset, then in theory the net result would be zero emissions – what is commonly referred to as a “net zero” position.

Carbon offsetting lacks the regulatory oversight and control of some of the other approaches to carbon pricing, such as government-run carbon policies.

But in exchange, it provides a wide range of flexibility. Carbon offset projects can be highly technical CCS programs or focused on natural approaches, such as restoring natural carbon sinks like forests and peat bogs.

Keys to a Successful Pricing Mechanism

Setting carbon prices that work requires a few key ingredients. Carbon pricing policies need to achieve the primary goal of reducing emissions.

And to do that, they generally require the following elements:

Justice – This is the “polluter pays” principle. The guilty party bears a monetary cost for the negative social cost of their practices.
Transparency – Any attempt to price carbon fairly needs to be open and transparent, making clear how the carbon price is calculated.
Alignment – Carbon pricing works best as part of a broader approach to the climate challenge. Enacting an internal price on carbon, then doing little or nothing to prevent water pollution, for example, casts doubt on the entire process.
Efficiency – Effective carbon pricing systems include ways to ensure compliance, pushing entities to reduce CO2 emissions over time.

Challenges for Carbon Pricing Systems

Each of the carbon price mechanisms mentioned above brings its own unique problems, but there are at least three broader issues to consider.

Leakage – Imposing a high price on carbon helps reduce CO2 emissions, but a poorly-designed program can lead to leakage when industries move production to other, less-regulated locations and end up producing more CO2 down the line.

This is the phenomenon known as “carbon leakage.” To avoid leakage, planners need to consider CO2 emissions at the meta-level, looking beyond a particular company or region.

Inefficiency – The implementation of a carbon price makes all the difference to long-term success. Great but poorly executed plans result in leakage, missed reductions, and a host of related issues regardless of the types of carbon pricing used.

Mismanagement – A good carbon pricing scheme generates revenue – but if that revenue isn’t used to reduce future emissions, then the entire program has missed the point.

Examples of Successful Carbon Pricing Mechanisms

A number of successful carbon pricing mechanisms are in use around the world already; here are three of the most notable.

EU ETS

The European Union’s Emissions Trading Scheme is a variation on a cap-and-trade program. It’s currently the largest carbon market, and a key part of the EU’s plan to tackle greenhouse gas emissions.

The EU ETS applies the same principle as most regulatory carbon markets, using a slowly reducing cap on emissions to force companies to gradually reduce carbon output. The market covered over 1.2 billion tonnes of CO2e in 2021.

California’s Cap-and-Trade

Regulated by California’s Air Resources Board (CARB), California’s cap-and-trade program is one of the only ones of its kind in the United States. It’s also one of the largest in the world, applying to several industrial sectors in California’s booming economy.

Power generation and fuel supply both come under the cap-and-trade program. The program began in 2013 and has already achieved noteworthy goals such as the reduction of GHG emissions to 1990 levels.

Voluntary Carbon Market

The voluntary carbon market (VCM) takes a different approach, employing a carbon offsetting mechanism. This expands the VCM beyond national jurisdictions, opening the door for a booming trade in carbon offsets from a variety of sources.

In particular, renewable energy, clean technology, carbon capture, and nature-based carbon sequestration are just some of the methods for creating carbon offsets.

There’s no internal carbon price in the VCM; instead, trade establishes a market price that varies from location to location and sector to sector.

The VCM: Setting the Standard for Carbon Pricing Programs

A good carbon pricing system makes the external costs of CO2 emissions clear and easy to see for businesses and corporations.

The VCM takes that idea one step further, opening the door for private individuals to participate directly in a global carbon market.

Individuals can purchase carbon offsets directly, creating a sort of personalized internal carbon price. They can also tailor their approach to the market depending on what they see as the most important impacts of climate change.

Even billionaires themselves have pumped millions of dollars of their personal money into the VCM. Their valuable investments helped fuel more market growth and inspire carbon removal startups to scale up and suck in more carbon from the air.

The greatest advantage of the VCM is the ability for companies and individuals to see the impact of carbon pricing directly.

For instance, offsets purchased on the VCM can regrow forests, push cutting-edge CCS technologies, and even support local rewilding efforts.

It’s for that reason and others that the VCM continues to grow at a breath-taking pace.

The post Carbon Pricing Explained: How Carbon Credits, Carbon Offsets and Taxes are Priced appeared first on Carbon Credits.