Posted: August 4, 2023

The 7 Characteristics of High-Quality Carbon Credits

Carbon credits are a powerful tool in the fight against climate change, and are currently the only way for businesses to hit their net zero goals when combined with other emission reduction strategies, per the SBTi. However, not all carbon credits are created equal — their quality can vary wildly.

High-quality carbon credits are those that effectively reduce or remove carbon dioxide emissions from the atmosphere in a sustainable, transparent, and long-term way. Let’s break down the seven specific characteristics shared by high-quality credits.

Breaking down the traits of high-quality credits

A high-quality carbon offset project is one that ticks all of these boxes:

1. Real

To be considered ‘real,’ greenhouse gas mitigation must have already occurred, and must be conservatively, transparently, and legitimately quantified.

A carbon project with mitigation benefits happening in the future cannot be recognized as a carbon offset. Offtake agreements allow for organizations to invest in projects before the GHG mitigation occurs, but credit for the mitigation won’t be issued until after the project is in effect and the carbon has been abated or removed. Furthermore, the quantity of abated or avoided emissions of a project must be legitimately calculated and regularly updated.

2. Additional

‘Additionality’ refers to the extent to which a project reduces emissions beyond what would have happened without the project. In other words, high-quality offsets do something that wouldn’t have happened otherwise.

For example, a landowner can choose to cut down the forest on their property for timber sales or keep it standing. If revenue from the potential sale of carbon credits results in the landowner preserving the forest, the credits are additional. But if the landowner was required by law to keep the forest standing, the credits didn’t provide an incentive and therefore the climate benefit isn’t considered additional.

3. Monitored, Reported, and Verified

Greenhouse gas reduction claims from the project must be monitored and reported, and claims must be verified by an accredited third party on a regular basis.

A robust monitoring, reporting, and verification (MRV) strategy is imperative to assure maximum climate, environmental, and socioeconomic impact of a carbon project. MRV helps inform project developers of the successes and potential shortfalls of their projects and assures that projects deliver their promised results.

4. Account for Leakage

A high-quality offset project won’t have negative impacts ‘leak’ into other areas or sectors.

For example, a forest protection project could inadvertently push illegal logging into other areas, resulting in emissions from deforestation in new locations.

5. Permanence

A high-quality carbon project should have a long-term impact, meaning that the carbon dioxide reductions it achieves will be sustained over an extended period of time. While the exact length of time is dependent on the nature of the projects, they should at the least be removing or reducing emissions for several decades.

As an example, events like a wildfire could damage a forest protected through the sale of carbon credits, emitting the carbon previously stored in that forest. Setting aside an extra “buffer pool” of credits that’s big enough to compensate for potential reversals can help mitigate risks of impermanence.

6. Do Not Harm

Projects should never result in negative socioeconomic or environmental impacts. Safeguards should be in place to prevent them — including obtaining the free, prior, and informed consent of indigenous peoples and local communities.

To illustrate: in order for a new forest protection program to sell carbon credits, it would need to demonstrate to credit issuers and future buyers that it undertook rigorous community impact assessments, obtained consent, and has robust ongoing mechanisms for community feedback (among other required safeguards).

7. Co-benefits

High-quality offset projects should provide additional benefits beyond reducing carbon dioxide emissions. These can be environmental, social, or economic in nature and help meet some of the UN's Sustainable Development Goals (SDGs).

For example, a reforestation project may have co-benefits that include enhancing biodiversity and/or protecting wildlife. For its part, clean cookstove projects might improve the welfare of the local population, result in better water quality, or reduce economic inequality.

How Catona Climate ensures quality

To combat the climate crisis, we must hold carbon credits to a higher standard. We’ve built on current practices and gone a step further to raise the bar for quality and integrity in the carbon market.

By filtering every project developer and individual project through our multi-step evaluation process, we ensure that we’re only providing credits that meet the highest standards to both individuals and enterprises.

In fact, only one in five projects we evaluate makes the cut.

Higher Standard

If you’re ready to discuss partnering with Catona Climate to achieve your net zero goals through high-quality carbon credits, get in touch with our carbon experts.

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