What is a carbon credit?

Good to know: Voluntary Carbon credits, enable organizations and private individuals to compensate for or neutralize their carbon emissions. Carbon credits are created by financing projects that reduce or avoid emissions from other sources, or that remove greenhouse gases from the atmosphere.

The basics

Carbon credits work on a simple idea: Since we all share the same atmosphere, if you take one tonne of Carbon Dioxide (CO2) out of the atmosphere in Australia, it is equivalent to taking one tonne of CO2 out of the atmosphere in the US.

How do they work?

A carbon credit represents the removal, or avoidance, of one tonne of carbon dioxide equivalent (tCO2e) from the atmosphere. These credits come from projects that prevent or reduce emissions being released, such as producing renewable energy, preserving rainforest land, providing cleaner cookstoves and so on.

So what does one carbon tonne look like?

• Driving 6000km in a diesel car

• Charging 121,643 smartphones

• The average emissions of one passenger on a return flight from Paris to New York

• Watching Netflix for about 420 days non-stop

Clnk works with projects that must meet two important criteria:

Additionality - These projects could not have happened without the funding provided by selling carbon credits.

Permanence - Sequestration or carbon capture projects must keep emissions out of the atmosphere for a reasonable amount of time.

Quality

Whilst each credit represents 1tCO2e prevented or removed from the atmosphere, not all carbon credits are created equal; credits created by certain methodologies may command a higher price than others. E.g. Forestry credits tend to command a higher price than renewable energy credits.

A number of factors influence the perceived quality of credit, including methodology, vintage, co-benefits, etc.

Buyers may want to consider all of these factors and choose credits from a project that they are comfortable with.