Voluntary Carbon Credit Markets

As our awareness of climate change and its damage to the environment increases, both companies and individuals are becoming mindful of their carbon footprint and are keen to reduce their carbon footprint. This has resulted in a growing trend in the voluntary carbon credit markets.

One voluntary carbon credit is equivalent to one ton of CO2 without any maturity. Essentially, a green project that is undertaken to reduce CO2 can sell this carbon credit for buyers to use as an offset for their carbon emissions, as illustrated.

Once these carbon credits are used and offset by the buyer, they are retired and will be cancelled from the carbon registry - at this point they are no longer tradable.Good to know: Splitting your product into fundamental concepts, objects, or areas can be a great way to let readers deep dive into the concepts that matter most to them.

Voluntary carbon credit markets are not merely companies cutting their own carbon emissions, but are in fact companies who indirectly invest into green projects that absorb or reduce the CO2 in our atmosphere - such as reforestation, afforestation, solar/wind energy farms and methane reduction from landfills.

Growth Momentum

More companies are starting to move towards a carbon neutral policy. Some see the voluntary carbon credits as supplements to their existing efforts to reduce their own emissions.

By supporting decarbonization beyond their own carbon footprint, they accelerate the broader transition to a lower carbon future.

Some companies like Microsoft are going a step further by setting a positive climate target policy. This means supporting more green projects, which results in more demand for voluntary carbon credits.

Although the voluntary carbon credits market is currently much smaller than the regulated market, it is gaining strong momentum, as illustrated below:

Benefits of Voluntary Carbon Credits

The demand for green projects has increased significantly as people have become more interested in removing CO2 from the atmosphere to produce a negative carbon scenario, as opposed to merely cutting CO2 emissions.

With a wide variety of projects to choose from, people can invest in the specific green projects they are passionate about and support the causes that resonate with them. such as saving a rainforest or helping to progress renewable energy projects.

Verifiable carbon credits are independently verified using globally accepted standards such as the UN Clean Development Mechanism, Gold Standards, International Carbon Registry and Verified Carbon Standard (Verra). All CO2 removals are real, measurable, permanent and independently verified before being registered into the carbon registries.

Carbon credits bought are perennial. They can be continuously traded until they are offset by the buyer - i.e. the buyer uses the carbon credit to offset their carbon emissions, retires the carbon credit and cancels it from the registry. At this point the carbon credit is no longer tradable.