Carbon credits are a financial mechanism used to finance emission reduction projects. When we refer to emission reduction projects, we are referencing either projects that avoid greenhouse gas emissions, or ones that remove greenhouse gas emissions, and which are quantified as one metric ton of carbon dioxide equivalent (tCO2e). More information can be found here.
If you're interested in more, please read our article on the difference between carbon avoidance and carbon removal.
Carbon avoidance Projects
To reach the Paris Agreement commitments and limit global warming to 1.5°C, greenhouse gas emissions must peak before 2025 and decline by 43% by 2030. In practice, this means that our short-term focus needs to be decreasing current emissions. To do so, governments, companies, and individuals need to minimize their greenhouse gas emissions by primarily decarbonizing and transitioning to cleaner energy sources and reducing waste.
Projects in the voluntary carbon market that generate emission avoidance credits do so by achieving reductions through energy efficiency, replacing fossil fuels with renewable energy, and avoiding degradation and destruction of natural carbon sinks by perceiving natural ecosystems.
At ClimateSeed we group these projects as follows:
- Agricultural Forestry and Other Land Use
- Renewable Energy
- Household and Community Devices
- Waste Management
- Transportation
1. Agriculture Forestry and Other Land Use (AFOLU)
About 30% of global greenhouse gas emissions are caused by forest destruction and poor agricultural practices; therefore, AFOLU projects offer a solution to reduce and avoid these emissions. Although AFOLU projects encompass a range of initiatives focused on sustainable management and utilization of forests and land resources, REDD+ projects (Reducing Emissions from Deforestation and Forest Degradation) are mostly categorized as avoidance projects.
REDD+ projects work by implementing strategies to combat climate change through forest preservation and restoration. These projects aim to reduce greenhouse gas emissions by preventing deforestation and degradation while promoting sustainable forest management practices. Projects are the result of either planned or unplanned deforestation threats. REDD+ projects often involve providing financial incentives to local communities and landowners for keeping their forests intact, thereby protecting biodiversity, indigenous rights, and ecosystem services.
2. Renewable Energy
The Intergovernmental Panel on Climate Change (IPCC) states that about 73% of global emissions come from the energy sector, meaning that transitioning to clean energy is crucial to achieve emission reductions. As such, renewable energy projects offer solutions to decarbonize the industry through renewable energy sources, such as wind, solar and hydro. Renewable energy is energy that is natural and self-replenishing. These are energies that are alternatives to fossil fuel electricity and heat production.
Although renewable energy power generation costs have fallen dramatically in upper and middle income countries, developing countries still face challenges to mobilize finance. As a result, these projects are still crucial in certain countries to support their transition to clean energy sources by financing these projects.
3. Households and Community Devices
According to the WHO and IEA, 2.4 billion people rely on solid fuels (such as; wood, charcoal, and animal dung) and are burning these fuels over an open fire or by using traditional stoves. Most of these people are in rural areas of Sub-Saharan Africa, South and Southeast Asia as well as Latin America. The reliance on open fires can pose health risks due to the indoor air pollution and contribute to environmental issues like deforestation. Cookstoves and safe drinking water carbon projects provide emission reductions by reducing the amount of fuel needed for cooking or boiling water.
Household and community devices generate enormous local benefits beyond reducing carbon emissions. Primarily, these projects provide improved health as it decreases indoor air pollution and reduces respiratory diseases, especially among women and children. Economically, households save money on fuel and time spent gathering it, allowing family members to engage in education or income-generating activities. Safe drinking water projects reduce the risk of waterborne diseases, further enhancing community health and reducing healthcare costs.
Check out our articles for more information on the future of cookstove projects, and how cookstoves support SDGs.
4. Waste Management
Waste management carbon projects focus on reducing greenhouse gas emissions associated with waste disposal and treatment and minimizing the negative impact on the environment and on human health. Instead of treating waste as the last part of the production chain, these projects are working with the waste to create sources of energy, reduce pollution and reduce carbon emissions. These projects adopt a more circular approach to climate solutions. Projects can include methane recovery, recycling initiatives, waste-to-energy.
According to the UNEP, only about 9% of plastic waste is recycled globally. The recycling, recovery and reuse of plastics, metals and paper to name a few, help reduce the amount of waste sent to landfills and therefore lower CO2 emissions. By working with recycled material instead of material from virgin inputs, the energy required is lessened as well as the environmental strain of natural resource extraction. Projects that are introducing circular business models and innovative technologies means new employment opportunities for local communities. This typology is taking materials that are often left untreated, unrecycled, and abandoned in landfill, and creating positive climate recovery solutions with it.
5. Transportation
As per the IPCC report, global transportation emissions are a significant contributor to climate change, accounting for about 14% of total greenhouse gas emissions. This sector includes emissions from road vehicles, aviation, shipping, and rail transport. These emissions primarily come from burning fossil fuel for our vehicles, ships, trains and planes. While transport currently has a big reliance on fossil fuels compared to other sectors, there are carbon projects that are helping to reduce emissions and promote sustainable ways of working, thinking and development; in a fast-paced world, these projects help develop sustainable transport changes in both urban and rural areas.
The most common transportation projects include electrification and alternative mobility projects. An electrification project can be developing widespread EV charging stations to support the adoption of electric cars. These projects not only reduce greenhouse gas emissions by replacing internal combustion engines which subsequently displaces emissions from conventional fossil fuel vehicles, but also decrease pollution and increase air quality. Alternative mobility projects shift the mode of transport for urban passengers to low carbon two-and three-wheeled mobility. Alternative mobility promotes sustainable development in cities, thus this typology is part of a greater overall goal of shifting the mode of transport while redefining the vision of e-mobility in an urban setting.
Misconceptions in the Voluntary Carbon Market (VCM)
1. Removal Projects are Higher Quality
There is a misconception that carbon removal credits are more robust than carbon avoidance ones, which is not true. Carbon credit quality is not based on the emission reduction type, but rather on the quality and robustness of the project itself. Learn more about our rigorous emission reduction selection process here.
2. Companies Should Purchase Only Removal Credits
There is another misconception that organizations should prioritize supporting carbon removal projects versus avoidance projects. Yes, it is true that Science Based Target Initiative (SBTi) highlights that companies can achieve net-zero target achievement by neutralizing their residual emissions through the permanent removal and storage of carbon from the atmosphere, BUT this is only applicable after a company has achieved both their near-term (5 to 10 years) and long-terms (by 2025) targets, and so have reduced their emissions by 90% with only 10% of residual emissions remaining. Before achieving these targets, companies should follow the Beyond Value Chain Mitigation (BVCM) guidelines and support both carbon avoidance and removals projects.
Although there are some misconceptions in the VCM regarding emission avoidance projects, companies should focus their efforts in the short-term to reduce greenhouse gas emissions. To do so, companies can support various project typologies with social, economic, and environmental benefits including, Agriculture Forestry and Other Land Use, Renewable Energy, Household and Community Devices, Energy Efficiency and Fuel Switching, Waste Management, and Transportation projects.
Contact ClimateSeed to learn about the avoidance project available and their co-benefits! For more information on why avoidance credits are not inherently inferior to removal ones, please read our article.
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