Trusted opinion: Oz carbon credits largely a sham, overhaul urgent.

Macintosh, an environment law and policy professor and the former head of the government’s Emissions Reduction Assurance Committee, said in March the growing carbon credit market was “largely a sham” and a fraud on taxpayers and the environment, as regulation failures meant up to 80% credits approved might not represent real or new cuts in emissions.

“regulation failures mean up to 80% [of] credits approved might not represent real or new cuts in emissions.”

GreenCollar’s chief executive, James Schultz, said the company did not agree with that, but had long called for changes to strengthen the scheme. He said he was confident his company’s projects regrowing native forests in cleared areas were generating real emissions reductions, but there were issues with measurement and integrity that should be addressed.

“We’ve agreed with a lot of the criticisms and we were on the record on most of this stuff before,” he said. “We don’t agree with it all, but we agree with a lot.”

Andrew Forrest pictured in London in 2021.
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The joint submission said both parties had deep experience in carbon and environmental markets and supported the use of carbon offsets, preferably in conjunction with an effective carbon pricing scheme. Both said land-based projects could also have environmental and social benefits, including improving biodiversity and employment in regional areas.

But they identified three “fundamental problems”.

First, they said the legislation overseeing carbon credits, which was relaxed under the Coalition, did not ensure all methods used to create carbon offsets met high integrity standards.

Second, the two parties said the Clean Energy Regulator had too many roles and was potentially conflicted, and called for its powers to advise government and prepare methods under which carbon credits were created to be given to other agencies.

Third, they said the model used to estimate how much carbon dioxide was stored in regenerating forests was not calibrated for use in areas that already had significant amounts of vegetation and could lead to overestimation of emissions reductions.

GreenCollar said this could be addressed by excluding areas with more than 5% of their maximum vegetation and using direct measurement, not modelling. The academics said direct measurement would be better, but argued it would be “challenging and risky” to do it in a way that ensured growth was due to changes in management and not just rainfall. They said it would be better if uncleared rangelands were restored through biodiversity markets and straight payments for stewardship of the land, not carbon credits.

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Macintosh said the joint statement “reflected very well” on GreenCollar and, after the statement by major landfill gas project owners, was the latest in a string of big players that “had the courage and character” to publicly acknowledge change was needed. He said it reflected “very poorly” on the Clean Energy Regulator and the Emissions Reduction Assurance Committee.

“There really is no argument now for the government not to act,” he said. “We know there are multiple other market participants and scientists that agree with what we are saying and what GreenCollar is now saying. It is now time for them to lend their voices to the calls for change.”

The climate change minister, Chris Bowen, has said carbon credits were vital to reduce emissions and appointed a former chief scientist, Prof Ian Chubb, to oversee a review of the system.

The Clean Energy Regulator has rejected the criticisms. In a statement in June, the regulator and the Emissions Reduction Assurance Committee said Macintosh and his colleagues had failed to present robust evidence of a lack of integrity in the system and – as the precise areas of land where carbon credit projects took place could not be released due to legal restrictions – had based their analysis on an incomplete dataset.

Chubb is due to report back by the end of the year.


Carbon Credit: Why do they matter to your company?

Submitted by Carina Lima on Tue, 07/18/2017 – 17:53 Viridis energy

credito de carbono

The reduction of greenhouse gases has become an increasingly relevant and important issue for mitigating climate change. Nations have sought ways to encourage companies to both decrease pollution and to raise awareness of the importance of this issue.

Carbon credits are an initiative of governments worldwide to generate source of savings for countries that reduce greenhouse gas emissions or remove them from the atmosphere. But do you know how these savings can benefit your company?

What is a carbon credit?

each ton of carbon dioxide either not emitted or removed from the atmosphere is equal to one carbon credit.

With the signing of the Kyoto Protocol in 1997, a market was created for the reduction of greenhouse gases, assigning a monetary value to the reduction of emissions. One of the Flexible Mechanisms defined by the Kyoto Protocol is the Clean Development Mechanism (CDM).

The signatory countries of the Protocol have agreed to reduction targets. Carbon credits received in the process of meeting these targets can be sold to governments or companies that have not been able to reduce their emissions.

Despite the difficulty some countries have had in reducing emissions, experts agree that the most important thing from an ecosystem perspective is the global effort to reduce greenhouse gases, regardless of political boundaries and progress toward compliance in specific jurisdictions.

Thus the carbon market allows a government or business to acquire emissions reductions created elsewhere to achieve its own objectives.

The goals of the initial agreement were expanded and updated at the Durban Climate Change Conference in 2011.

Opportunity for businesses

The carbon market has gained prominence as an economic opportunity for companies that demonstrate reductions and sell their credits on the carbon market. In this way companies can recover part of the investment made in sustainable projects.

In addition to the financial advantages, it is also possible to bring gains to society focusing on the well-being of the planet, and your company’s brand benefits from these efforts. Some companies donate their carbon credits to contribute to the planet in global events such as the World Cup or the Olympics. The increase in the use of transportation, construction, and even lighting in the venues has the potential to greatly increase greenhouse gases, and these factors motivated companies to participate in the Sustainable Cup campaign in 2014. The companies that joined the campaign donated their carbon credits to offset part of the emissions generated by the World Cup. In addition to their contribution for the environment, these companies could advertise their brands liked to a global sustainability initiative.

In order to promote the market, some governments have established that companies that are significant emitters of greenhouse gases must buy carbon credits from companies that have them so that there is always a supply and demand relationship for carbon credits. This market is considered to be a commodities exchange, that is, a carbon credit is a commodity having a price established by the international market. The established parameter is that each ton of carbon dioxide either not emitted or removed from the atmosphere is equal to one carbon credit.


Carbon creditFlávio Gazani, the president of ABEMC (Brazilian Association of Carbon Market Companies) explains that in order for a company to obtain carbon credits they are required to submit an emissions reduction project to a national or international commission. The commissions assess whether the project presented is in fact an initiative that will benefit the atmosphere, and they approve the carbon credits accounting, taking into consideration the greenhouse gases that the company no longer emits. Initiatives such as the substitution of polluting sources of energy by clean energy, adoption of programs of energy efficiency, and also software that reduces the consumption of energy generate credits because they are initiatives that reduce emissions by not using energy sources that are more polluting or by reducing the consumption of energy.

Final considerations

Preventing the advance of global warming is a responsibility shared by all, from governments to companies.   The Kyoto Protocol took the form of an incentive for institutions to have some economic return when they proposed to adopt measures that benefit the environment. Even in cases where the financial gains do not represent a windfall for a company, the return for the atmosphere and all of society in general is of extreme importance and is worth institutional dedication.

Marketing Coordinator, Viridis Energy

Marketing Coordinator at Viridis, holds undergraduate degree in Event Management and a graduate degree in Marketing and Communications, certified in Inbound Marketing by Hubspot, with great experience in digital marketing, corporate event production, content marketing, copywriting, planning, and SaaS sales.

The Carbon Credit Lifecycle

Carbon credits, also called carbon offsets, have a crucial role in reaching net zero emissions goals. And while each carbon credit is not created equal, they all start in the same place and go through a similar lifecycle process.

So, whether you’re directly reducing footprint or supporting projects that cut emissions somewhere else, offsets let you do both.

In this article, we’ll explain what happens during the entire carbon credit lifecycle, from point of creation to retirement. We’ll explore where carbon offsets come from and take a look at key players or parties involved.

Understanding the full carbon offset lifecycle will help you navigate the fast-changing carbon market.

Tracing the Lifecycle Stages of a Carbon Credit

A carbon credit is also referred to as a carbon offset in the voluntary carbon market. Individuals or firms can use the credits to voluntarily offset their carbon emissions.

Each credit represents a tonne of carbon reduced or prevented from entering the air.

As such, offsets act as a means that help tackle climate crises while allowing different entities to use them, regardless of location.

The life of a carbon offset goes through four general stages:

  1. Development
  2. Validation/verification
  3. Registration & issuance
  4. Retirement

Let’s trace the lifecycle of a carbon offset credit while identifying the parties involved in each stage.

1. The conception of a carbon offset: Project Developers

Carbon emission reductions happen all the time, but not every reduction qualifies as an offset.

  • Before a carbon reduction becomes a carbon offset, it has to meet a set of quality criteria based on methodologies specific to a certain kind of carbon project.

The term “methodologies” may sound complicated. But they refer to the detailed procedures that developers use to quantify a project’s emissions reduction potential.

They’re also known as protocols, the blueprint for how various project metrics are calculated.

Each carbon project is unique, be it renewable energy or agricultural project. And so developers have to take several variables into account when developing them. They begin the process by designing the project and formalizing it in a Project Design Document (PDD).

Using a specific methodology, they then outline the project activities in the PDD. Some of the approved methodologies and protocols include:

  • American Carbon Registry (ACR) methodologies
  • Climate Action Reserve (CAR) protocols
  • Clean Development Mechanism (CDM) methodologies
  • Verified Carbon Standard (VCS) methodologies

Next, project developers establish a baseline of emissions reduction which is for assessment by a 3rd-party body. This is the 2nd stage of the carbon credit lifecycle explained in the next section.

Once the reduction impact of a project has been assessed (via a certain methodology), the developer now holds the carbon rights to that project.

Of course, the work of a project developer, whether it’s an individual or an organization, doesn’t end there.

They have to register the project with an approved registry like the Verra. This body tracks offset projects and issues their corresponding credits. More on this in the 3rd stage of the lifecycle process.

  • Project developers also need to conduct regular monitoring and reporting of project activities on the ground.

Monitoring involves keeping track of the updates or progress of the project metrics. While reporting involves preparing the necessary documents about the project.

Right now, there are 170+ types of projects that produce carbon credit offsets according to Ecosystem Marketplace. But they fall under eight major categories as shown below.

EM carbon project categories


2. The birth of a carbon offset

The second stage in the life of a carbon credit offset is undergoing a validation and verification process. Under this step are two responsible parties.

The Job of 3rd-Party Auditors

The first one is an independent, 3rd-party auditor also called the validation/verification body. This body comprises subject matter experts who can validate a project’s emission reduction claims, both projected and actual achievements.

Essentially, the VVB validates the following elements of a carbon offset project from the developer’s document:

  • Baseline scenarios
  • Monitoring process
  • Methodologies for calculating emission reductions

For example, professional foresters, agriculturalists, or community development experts often audit/validate forest carbon projects. The carbon program standard (e.g. Verra VCS) must accept these auditors to process the registration.

Auditors ensure the integrity and accuracy of the data and information published by the developer on the project. Some of the widely known carbon project auditors are QAS, EPIC Sustainability, First Environment, and SCS Global.

Upon successful completion of the validation, the auditor will issue a validation report and validation statement. These documents confirm that the project has been designed and implemented in accordance with the carbon certification standard.

The Verification Process.

Verification is key when it comes to ensuring that project data reported is true, transparent, and has integrity. In other words, it’s verifying that the project is actually doing what it says it’s doing.

Verifiers have to confirm that a proposed project meets a carbon program’s eligibility criteria. They can then verify by confirming that project monitoring data was collected in accordance with a program’s requirements.

They also verify that the calculations of the project’s emission reductions were done based on the approved methodology/protocol.

  • The verification process often involves a site visit while monitoring data to confirm that they’re accurate.

After the project has been validated and verified, it’s now ready for registration.

But wait, there’s another key party to consider to ensure the quality of the carbon credit – the carbon ratings agency.

The Role of 3rd-Party Rating Agencies

Carbon rating agencies rate or score the likelihood that the carbon offsets issued via the project have indeed reduced a certain amount of carbon or its equivalent.

Different rating agencies use various frameworks or criteria in providing their scores. Some rate using an alphabetic scale (e.g. BeZero) – AAA, AA, A. Others give their ratings by using the scale of A (highest rate) to D (lowest rate) like how Sylvera does.

Projects must meet specific criteria to be eligible for a rating by an agency. While the criteria may vary, in general, projects must satisfy at least 3 things: carbon score, additionality, and permanence.

Also, rating agencies also require that the project has been audited as part of their scoring framework. Plus, there should be enough information on the project design and monitoring process available to base the ratings on.

Here’s an example of how Sylvera rates ARR projects.

Now that it’s officially (and proudly) born, the carbon credit offset can now move on with its life.

3. Carbon offset in action

This stage in the carbon credit lifecycle involves the carbon registries.

Carbon Registries

Registering a carbon offset project in an approved registry is easy if the previous steps above are taken into consideration.

Projects are certified and issued carbon credits called in various names, depending on which registry they’re registered in. For instance, under the Verra VCS program, the credits are called Verified Carbon Units or VCUs.

Under the Gold Standard offset program, they call carbon credits Verified Emission Reduction or VER. While Climate Action Reserve refers to them as Climate Reserve Tonnes or CRT.

  • Regardless of their names, registries characterize carbon credit offsets through a number of quality assurance metrics. They’re confirmed via the validation/verification tasks explained in the prior step.

Each offset represents a reduction or removal of one tonne of CO2 equivalent achieved by the project.

The procedures to follow to get a project registered, certified, and issued with credit offsets depend on the specific registry chosen by the developer. The same goes for the rules or requirements provided.

Once the offset credits are issued to a project, they can now be in action. That means developers can look for their buyers in the carbon market.

4. Carbon offset retirement

Carbon offsets are bought by two parties – speculative investors and end buyers.

End buyers can be individuals, corporations, and governments. Buying carbon offsets can happen out of compliance to laws (compliance/regulatory carbon market). Or it can also be a voluntary decision to tackle emissions (voluntary carbon market).

Heavy industrial emitters are the major buyers of carbon offsets as part of their compliance requirements. But plenty of large firms are also buying because of their climate commitments.

If you prefer to buy offsets directly from project developers, you can do so.

Yet, buyers can also get offsets from brokers, traders, and exchanges. They can then use those offsets to address their current emission reduction measures.

But there’s another way to make money out of trading carbon credits. It’s via speculative marketplace/exchanges and carbon ETFs.

Speculative investors buy offsets through futures contracts with the intention to sell them later at a higher price, hopefully.

Top carbon exchanges include the CME Group, Xpansiv CBL, Climate Impact X, ICE, AirCarbon and Carbon Trade Exchange.

No matter how or where the carbon offsets are bought, once they’re used and reported as emission reduction, they should be retired.

Retirement of offsets also means their death. They should not be around anymore and are not for resale. They must serve their emission reduction purpose only once to avoid double counting.

That also means removing them from the marketplace and labeling them as retired in any records.

A retired carbon credit offset can now say goodbye to its not-so-popular yet critical world of reducing emissions.

If you’re interested to know more about carbon offsets, read our primer here. Or if you want to learn how to make money with them, go over this comprehensive guide.

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