About Carbon Credits

Greenhouse Gases

The "greenhouse effect" refers to the temperature regulation effect that certain atmospheric gases have on the earth. The temperature-regulating gases, called "greenhouse gases" or GHGs, form a blanket around the earth that traps some heat from the sun within the earth's atmosphere, keeping the planet warm and habitable. "Global warming," or climate change, can occur when the blanket of GHGs gets thicker. As atmospheric concentrations of GHGs increase, the greenhouse blanket gets thicker. This causes heat to be trapped in the lower layers of the atmosphere and may cause global average temperatures to rise. Implementation of Carbon Credit Exchanges help to build and test the institutions and skills needed to cost-effectively manage GHGs.

The Six Greenhouse Gases

Name	Abbreviation	Global Warming Potential (CO2e)	% Total World Emissions
Carbon Dioxide	CO2	1	77%
Methane	CH4	21	14%
Nitrous Oxide	N2O	310	8%
Sulfur Hexaflouride	SF6	23900	<1%
Flurocarbon Gases	HFCs & PFCs	150 to 11,700 (HCF23)	<1%

Carbon Sequestration & Storage

Carbon sequestration can be defined as the capture and secure storage of carbon that would otherwise be emitted to or remain in the atmosphere. Carbon credits work in two main areas: (1) prevention and/or reduction of carbon emissions produced by human activities from reaching the atmosphere by capturing and diverting them to secure storage, and, (2) the removal of carbon from the atmosphere to secure its storage.

Carbon is continuously cycled between land, vegetation, sea, and the atmosphere in both inorganic and organic form. Most of the carbon stored in organic matter is nonliving, occurring either in soil humus or dissolved organic carbon (DOC) in seawater. The atmosphere, in addition to comprising a major carbon reservoir, plays a critical role as a medium for rapid global exchange of CO2 and other bioactive elements.

Sequestering or "holding" carbon in soil and plant material such as trees helps reduce carbon dioxide in the atmosphere. Increased levels of carbon dioxide (CO2) can be stored in the soil through no-till planting, restoring wetlands, converting cropland to permanent grass or trees, planting conservation buffers and using cover crops.

What is a Carbon Offset?

A carbon offset is generated by the reduction, avoidance, or sequestration of GHG emissions from a specific project.

Offsets are used to reduce or neutralize the net carbon emissions of another entity (regulated entities, private companies, or individuals).

Carbon offsets are measured in metric tons of CO2 (unit: 1 mtCO2e). They can be traded on compliance or on voluntary markets, where they “offset” one ton of CO2e emission.

Growth and sustainability of carbon credits have subsequently created new income sources for offset project owners dedicated to the improvement of numerous environmental services. Eligible sectors for offset projects include: Forestry, Soil Carbon in Agriculture, Agricultural Manure Management (Methane Digestion), Geological Sequestration, Waste Management, Renewable Energy, Energy Efficiency, and N2O reduction.