Carbon Credits
A carbon credit is a freely tradable commodity similar in some ways to;
- Gold
- Oil
- Coffee beans
How did carbon credits originate?
The opportunity to trade carbon credits was created by the United Nations' Kyoto Protocol, a legally binding document committing countries to efforts for the reduction of greenhouse gases (GHGs).
To facilitate this, the Kyoto Protocol gave GHGs a value, known as a carbon credit. Each carbon credit is equivalent to one tonne of CO2. If a company has emissions over its allowance, it can purchase carbon credits at a cost. Conversely, companies able to stay under this allowance or actually reduce emissions can receive credits, which can be traded the same as any other commodity. Thirdly, projects in developing countries, which actively reduce GHG emissions, become eligible for carbon credits, and by selling them, they can raise funds.
There are two main markets for carbon credits;
- Compliance Market credits
- Secondary / Verified Market credits (VERs)
AGT offer carbon credits in the Secondary / Verified market and the credits in this market are known as Verified Emissions Reductions (VERs)
The VER credits can be bought and sold as an investment or can be used to offset the carbon footprint of a company or individual.