Buying carbon Credits - Frequently asked questions

What are carbon credits?

Carbon credits are similar to certificates that represent a reduction of greenhouse gases in the atmosphere. Projects that prevent the generation of greenhouse gases or remove greenhouse gases from the atmosphere earn these credits, which can in turn then be "sold" to other businesses and individuals to "offset" the emissions they generate. One carbon credit is the equivalent to a saving of one tonne of carbon dioxide (CO2). Where do carbon credits come from?
Carbon credits fund the environmental projects designed to reduce CO2 emissions including:
  • The removal of carbon dioxide from the atmosphere and the storage of it in a “sink” e.g. forestry;
  • The reduction of carbon dioxide emissions by replacing fossil fuels with renewable energy sources e.g. wind and solar energy;
  • The capture of greenhouse gases and alternative use or destruction of them e.g. methane capture at landfills;
  • The reduction of emissions through energy efficiency, e.g., reduce the amount of fuel or electricity needed.

Who buys carbon credits?

There are two markets for carbon offsets. In the compliance market, companies, governments, or other entities buy carbon offsets in order to comply with regulations on the total amount of carbon dioxide they are allowed to emit.
In the voluntary market, individuals, companies, or governments purchase carbon offsets to mitigate their own greenhouse gas emissions from transportation, electricity use, and other sources.

Those buying voluntary credits to offset their emissions are generally buying for Public Relations/branding and Corporate Social Responsibility reasons. The next most common reason for purchases in this market is as a “pre compliance buy” (those buying in anticipation of regulation).

Other buyers are purchasing offsets for branding and competitive advantage reasons and taking action on greenhouse gas emissions to address the threat of climate change. Some companies or individuals can reduce their emissions a little or a lot, and for others it can be extremely difficult, impossible or not economically viable to reduce their emissions. Purchasing credits earned from a verified emission reduction project can help to offset such emissions and in turn, the revenue earned from the sale of those credits helps to fund that emission reduction project.

Project Types & Standards

There are many different types of projects to help reduce or emit carbon emissions including:
  • Agricultural Methane Collection
  • Renewable Energy
  • Industrial Gas
  • Energy Efficiency
  • Fuel Switching
  • Geologic sequestration (GS)
  • Forestry and Land Use
Carbon offset markets exist both under compliance schemes and as voluntary programs. Compliance markets are created and regulated by mandatory regional, national, and international carbon reduction regimes, such as the Kyoto Protocol and the European Union’s Emissions Trading Scheme. Voluntary offset markets function outside of the compliance markets and enable companies and individuals to purchase carbon offsets on a voluntary basis.

The voluntary carbon market provides various carbon offset standards including:
  • Clean Development Mechanism (CDM)
  • Gold Standard (GS)
  • Voluntary Carbon Standard (VCS)
  • VER+
  • The Voluntary Offset Standard (VOS)
  • Chicago Climate Exchange (CCX)
  • The Climate, Community & Biodiversity Standards (CCBS)
  • The Carbco Platinum Standard
  • Plan Vivo System
  • ISO 14064-2

Project Verification & Registration

The role of verification is to inform the buyer what they are buying and whether it is real i.e. that the credit has been earned from a genuine emission reduction project; that has been implemented and verified according to a leading international standard and most importantly that the credit resides in the registry that has been appointed by that standards authority to issue and manage the credits earned from projects in accordance with those standards.

A previous conflict of interest arose from the fact that verification auditors are currently chosen and paid by a project’s developer. There is this pressure on auditors to approve projects in order to preserve their business relationships with the developers. This compromises the auditors’ independence and neutrality. To account for this all premium projects are now validated by a third party verification auditor to approve and accept the project prior to the issuance of the carbon credit.

The three main registries for the voluntary markets are:
  • APX
  • Caisse des Dépôts, CDC Climat
  • Markit

How does the investment work?

360investgroup keep their carbon credit prices low, and can therefore offer credits to investors from just £5. By selling these on to companies and individuals investors are able to profit from the growing demand for carbon credits. Most companies sell for between £10 and £15, meaning significant profits for investors on resale.

What credits do you use?

360investgroup use only Gold Standard and VCS credits, which are premium credits coming only from projects which have been verified to a high standard. The Gold Standard quality benchmark promotes sustainable development in carbon markets and certifies real emission reductions.

Where can I see my purchased carbon credits

We hold the credits in a nominee account held at APX

Where can I see my purchased carbon credits?

We hold the credits in a nominee account held at the APC/VCS registry, you will receive a contract note and also an access code so that you can view your account via our website.

taken from 360investgroup
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