Carbon Credits Explained

What are the Carbon Certificates?

Greenhouse gas emission certificates, commonly known as carbon certificates or CO2 certificates, are tradable rights representing one ton of carbon dioxide emitted or avoided or saved.

There are two main types of carbon certificates:

Carbon Credits

Mandatory carbon certificates are part of government-regulated systems, such as the European Union’s Emissions Trading System (ETS). These certificates are issued and regulated by authorities and are intended for companies in specific industries that are required to reduce their CO2 emissions according to limits set by legislation.

How does it work?

Regulation
Companies operating in high-emission sectors (such as energy, heavy industry) receive an allowable emissions quota. If they exceed this quota, they must purchase carbon certificates from the market to cover the additional emissions.
Penalties
If companies fail to comply with the quota, they risk heavy fines and severe sanctions.
Purpose
This system encourages the gradual reduction of greenhouse gas emissions by increasing the costs associated with pollution.

Voluntary Carbon Certificates

Voluntary carbon certificates are purchased by companies, organizations, or individuals who wish to offset their carbon emissions on their own initiative, not due to legal obligations. These certificates are used to support emission reduction projects, such as recycling, renewable energy or reforestation projects.

How does it work?

Voluntary Acquisition
Anyone can purchase such certificates to reduce their carbon footprint. For example, a company can buy voluntary certificates to offset emissions from its activities or supply chain.
Transparency
Usually, the purchase of voluntary certificates comes with detailed reports that show exactly how and where the carbon emission was reduced or avoided.
Purpose
These certificates promote social and environmental responsibility, being a choice for companies and individuals who want to contribute to environmental protection.

Carbon Credits Explained

What are the Carbon Certificates?

Carbon Credits

How does it work?

Voluntary Carbon Certificates

How does it work?

Newsletter