Types of Carbon Credits
Protect nature, water and biodiversity
Carbon credits can be categorized based on their source, methodology, and impact. Here are the main types in the voluntary and compliance carbon markets:
1. Nature-Based Carbon Credits
These credits come from projects that leverage natural ecosystems to capture or prevent emissions.
- Afforestation, Reforestation, and Revegetation (ARR): Planting trees to absorb carbon dioxide.
- Avoided Deforestation (REDD+): Preventing deforestation and forest degradation.
- Soil Carbon Sequestration: Enhancing soil health to store more carbon.
- Blue Carbon: Coastal ecosystem projects like mangrove and seagrass restoration.
2. Technology-Based Carbon Credits
These credits come from engineered solutions to reduce or capture emissions.
- Carbon Capture, Utilization, and Storage (CCUS): Capturing CO₂ from industrial processes and storing or repurposing it.
- Direct Air Capture (DAC): Pulling CO₂ directly from the atmosphere and permanently storing it.
- Biochar: Converting biomass into a stable carbon form that can be stored in soil.
3. Renewable Energy Carbon Credits
These credits are generated by projects that replace fossil fuel energy with clean energy sources.
- Wind, Solar, and Hydropower Projects: Reducing reliance on carbon-intensive power generation.
- Geothermal Energy: Harnessing Earth’s heat to generate electricity with low emissions.
- Biogas & Biomass Energy: Using organic waste to produce energy while reducing methane emissions.
4. Energy Efficiency and Industrial Process Credits
These credits arise from projects that lower emissions by improving energy use.
- Efficient Cookstoves: Reducing wood or charcoal use in developing countries.
- Waste Heat Recovery: Capturing excess heat from industrial processes for reuse.
- Building and Industrial Energy Efficiency: Upgrading systems to reduce power consumption.
5. Methane Capture and Avoidance Credits
Projects that prevent methane emissions, which are significantly more potent than CO₂.
- Landfill Gas Capture: Preventing methane from waste decomposition in landfills.
- Agricultural Methane Reduction: Managing livestock waste or rice paddies to lower methane emissions.
- Coal Mine Methane (CMM) Capture: Preventing methane leakage from mining operations.
6. Blue Carbon Credits
Projects that focus on preserving and restoring marine and coastal ecosystems that store carbon.
- Mangrove Restoration: Protecting and replanting mangroves to enhance carbon sequestration.
- Seagrass & Wetland Conservation: Maintaining critical carbon sinks in coastal areas.
7. Avoided Emissions Credits (Controversial)
Some credits are based on preventing emissions that would have otherwise occurred. These are debated due to concerns over additionality and permanence.
- Carbon Offsets from Avoided Deforestation (REDD+): Preventing deforestation but challenging to verify.
- Renewable Energy Credits (RECs) in Developed Markets: Used where clean energy projects are already financially viable without credit support.
Each type of carbon credit has different levels of scrutiny, integrity, and verification methodologies, making it crucial for buyers to assess additionality, permanence, and co-benefits before purchasing.
