A carbon credit (sometimes referred to as a carbon offset) is a term that is used to refer to a certificate representing one tonne of carbon dioxide or equivalent greenhouse gases that have been removed or avoided from the atmosphere. By buying carbon credits, you are able to offset your own carbon footprint with the equivalent amount of carbon dioxide that you have emitted.

There are a number of different types of carbon credits or offsets. The most common offset takes place when an organization or individual purchases the right to release emissions into the air and then compensates for another organization’s pollution reduction efforts.

This article lists below some of the most commonly traded carbon credit types and permits.

What is a Gold Carbon credit?

A Gold Carbon credit is a tradable certificate that can be held by individuals, organizations, and even countries. They’re a type of climate change mitigation instrument, which means they help reduce global carbon emissions.

The Gold Standard (GS), or Gold Standard for the Global Goals, is a standard and logo certification mark program for non-governmental emission reduction projects. The GS is a performance-based, globally applicable system that certifies emission reduction projects in developing countries as sustainable and transparent. The GS standard is based on internationally agreed principles and guidelines that ensure that the emission reductions are real, additional, and permanent.

The “Gold Standard” in carbon credits, Gold Carbon Credits are created by third-party verified projects that are registered with the United Nations Framework Convention on Climate Change (UNFCCC).

What is a VER carbon credit?

A VER (Verified Emission Reduction) carbon credit is an emission reduction credit that is generated by a VER project. A VER project is a voluntary emissions reduction activity that reduces greenhouse gas emissions from electricity generation that is certified through the Verified Carbon Standard which is for voluntary emission reduction.

Verified Emission Reductions (VERs) are usually certified through a third party verification process, and they can be used in the voluntary carbon market as a means of compliance with markets where companies have a limit on their emissions but then further “capacity” can be purchased through offsets (cap-and-trade systems). The voluntary carbon market includes any market that does not have mandatory requirements for reporting emissions or verification of emissions reductions.

What is a CER carbon credit?

Certified Emission Reduction (CER) is a carbon credit that is issued to entities that have reduced their greenhouse gas emissions below the baseline. CERs are generated when projects, such as renewable energy projects, have been registered under the Clean Development Mechanism of the Kyoto Protocol.

CERs are a type of credit that is governed by the UN backed Clean Development Mechanism (CDM). The CDM is an international standard that is used to measure the carbon emissions from power plants and other sources. The CDM allows entities to purchase CERs if they exceed their limits on CO2 emissions, or they can sell CERs if they fall below their limits. Typically CER credits are part of markets where carbon emission controls are controlled by some regulation (also known as “compliance markets”)

What is a CCER carbon credit?

A CCER (China Certified Emission Reduction) carbon credit is a type of carbon credit that is earned by investing in renewable energy in China. The money used to purchase CCERs goes toward projects like wind farms and solar arrays. This helps to curb greenhouse gas emissions by making it easier for people to switch over to renewable energy sources like wind and solar power.

As per current (2022) regulations, companies in select industries that have difficulty meeting their carbon reduction targets in China will have the ability to purchase CCER carbon credits from other companies that are able to reduce emissions more quickly than they are. These credits represent reductions in greenhouse gas emissions that were made by another company somewhere else in the world or at another time in history. Companies can also sell their own unused CCER carbon credits back onto the exchange if they end up having more than they need for their own emissions reductions goals later on down the line

What is a CORSIA carbon credit?

 A CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) carbon credit is a tradable certificate that entitles the aviation holder to emit one tonne of CO₂.

The CORSIA requires airlines to monitor and report their CO₂ emissions from international flights and invest in projects that reduce greenhouse gas emissions elsewhere as required by the International Civil Aviation Orgnisation (ICAO). The reporting requirements are intended to ensure that airlines are reducing their own emissions sufficiently to offset those generated by their aircraft, regardless of whether they operate internationally or not.

Airlines must also purchase carbon offsets if they exceed the carbon-neutral level set by ICAO. This ensures that airlines do not exceed their target amount of CO₂ emissions even after taking into account all investments made into reducing their own emissions.

Can you trade carbon credits?

The process of trading carbon credits is called a “carbon market.” This market allows companies that have exceeded their carbon emission limits to purchase excess carbon credits from companies that have not exceeded their limits. The idea behind this system is that the companies that exceed their limits will be able to avoid paying fines by purchasing extra credits from other companies.

What is a compliance market vs. a voluntary market for carbon credits?

A compliance market is a market for carbon credits that is regulated by the government. The government sets a cap on the total amount of pollution allowed in the form of emissions credits (which are also known as carbon credits). Companies that exceed their emissions caps must buy additional credits from other companies that produce lower levels of CO₂. In this way, companies can meet their regulatory requirements while still continuing to do business.

Voluntary markets are similar to compliance markets in that they also involve trading emission allowances or carbon credits. However, they are not regulated by any government agency; instead, they are set up and run by private companies or organizations.

Conclusion

In sum, carbon credits have already become the subject of much debate. These types of credits affect individuals, businesses, and even countries as they attempt to curb their carbon footprint. Although different in demographics and regulations, these five types of carbon credits are united by their overall mission: to create a more environmentally pleasant world for all people.