Carbon Credit Systems: The Good, Bad and Ugly

Will Hargreaves2022-08-18

A brief guide on the state of carbon credits.

When it comes to carbon credit systems, there are a lot of acronyms flying around. The two most common units are CER and VER. But what do they actually mean? And why should you care?

Differentiating between CER and VER

CER stands for Certified Emissions Reduction. This is the name given to carbon credits that have been verified by an international body, such as the UN. These units are traded on international markets and can be used by companies to offset their emissions. A notable body that helps in clarifying the status of CER's is the Gold Standard.

The Gold Standard is a set of rules and guidelines that carbon offset projects must follow in order to be certified. The standards cover aspects such as additionality (i.e. the project must result in emissions reductions that would not have happened without the carbon credit), environmental integrity, and stakeholder engagement. The Gold Standard only issues CERs, so all of its projects are independently verified. VER, on the other hand, stands for Voluntary Emissions Reduction. These are carbon credits that have been generated by projects that have not been verified by an international body. The Gold Standard does not issue VERs.

So, what's the difference between CERs and VERs? The main difference is that CERs are regulated by an international body, while VERs are not. This means that CERs are more reliable and have a higher environmental standard. The Gold Standard only issues CERs to ensure the highest possible environmental quality of its projects.

Let's take a look at the good, bad and ugly of carbon credit systems.

Tell it to me straight: The Good, bad and ugly

The Good: Carbon credit systems can help to reduce emissions by providing financial incentives for projects that reduce greenhouse gases. The Gold Standard only funds projects that have a permanent reduction in emissions, so you can be sure that your money is going towards something that will make a real difference.

The Bad: Carbon credit systems can be open to abuse. Some companies have been known to create "false" credits by claiming emissions reductions that would have happened anyway. The Gold Standard has a rigorous verification process to ensure that all projects funded are legitimate and will result in real emissions reductions.

The Ugly: The carbon credit market is complex and often confusing. The price of carbon credits can fluctuate wildly, making it difficult to predict the cost of offsetting your emissions. The Gold Standard offers a fixed price for carbon offsets, so you know exactly how much it will cost to offset your emissions.

When thinking about offsetting emissions, due diligence and research would hopefully lead someone to a reputable carbon credit provider, such as The Gold Standard. The issue is an accolade of a good reputation within a burgeoning industry is relative - the comparative standards and performance have not been established through time.

There are always going to be issues but we're getting there

There are drawbacks and risks inherent in any framework used. Best practice requires that these be acknowledged openly and discussed with an appreciation for limits, possibilities and where participant incentives diverge. The aim should be to avoid 'greenwashing', where the application of a veneer of environmental responsibility serves only to obscure the true impacts of business-as-usual.

The problem is that not all carbon offset providers are created equal. The voluntary market is particularly vulnerable to greenwashing, as there are no mandatory standards or regulations that offset providers must adhere to. This means that it's up to the buyer to do their due diligence and make sure that the offsets they're buying are legitimate and will result in emissions reductions.

While carbon credit systems can be open to abuse, when done correctly they can be a powerful tool in the fight against climate change. The Gold Standard only funds projects that have a permanent reduction in emissions, so you can be sure that your money is going towards something that will make a real difference.


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