Looking to offset your carbon footprint, but unsure how to do so? In this article, we guide you through the process of purchasing carbon credits.
As the world moves towards Net Zero, more and more companies are offsetting their carbon footprint, by contributing financially to sustainable projects around the world. But how exactly does offsetting work, and what are your options when looking to purchase carbon offsets?
What is carbon offsetting?
Carbon offsetting is the process of purchasing carbon credits generated by CO2 absorption projects, to make up for a company or person’s emissions. First, it requires calculating carbon footprint. How to calculate the carbon footprint of a company. Let’s say a company has emitted 1,000 tons of greenhouse gases (GHG) in a given year: to offset this footprint, it will need to buy 1,000 carbon credits, each representing 1 ton of CO2-equivalent. This accounting system is a relatively simple way to ensure that the world doesn’t emit more than it can absorb, as well as providing much needed financing to carbon mitigation projects.
Once you know what your carbon footprint is, and after you have taken measures such as switching to renewable energy or cutting electricity consumption to reduce it, it is time to offset the remaining carbon emissions by purchasing carbon credits. What are ‘good’ or ‘bad’ carbon credits?
Different ways to buy carbon credits
There are several ways to buy carbon credits to offset your footprint.
Buy carbon credits directly from developers
The most direct way to purchase them is at the source: from the organization responsible for the project you want to support. In this case, your company can either invest in the development of the project with a promise of return in the form of future carbon credits, or buy what are called Emission Reduction Purchase Agreements (ERPAs), upfront payment for carbon credits to be delivered as and when they are generated. This latter option is more common when the project is already at a later stage of development.
There are two main advantages to buying your carbon credits directly from the project developer:
- it allows you gain a deep understanding of the project and get involved in its management
- you can secure lower prices than with a reseller
But this option is not for everyone:
- it requires a certain amount of research and knowledge to identify and engage with suitable projects
- the carbon credits are not immediately available as you purchase them
Purchase carbon offsets through a broker
Many project developers work with brokers to arrange the sale of their carbon credits. In this case, your company would get in touch with a broker and give them specifics about the type of project you’re looking for (location, price, etc.). The broker would find a project that suits you, then purchase carbon credits on your behalf and resell them to you with a mark-up.
This option can seem more practical than dealing directly with a project, particularly if you need a lot of carbon offsets: as a service provider, the broker handles all transactions.
But there are some significant downsides to take into account:
- brokers rarely disclose their pricing structures, so you have no clarity on the price of the carbon credit vs the broker fee
- in some cases, brokers charge companies almost three times as much as they pay project developers, abusing their power as the middleman and defeating the purpose of climate finance
The Financial Times recently exposed just how opaque carbon credit brokers’ practices can be. This is not an option we recommend.
Buy carbon credits on the ClimateTrade marketplace
The ClimateTrade marketplace combines the positive impact of buying carbon credits directly from the developer with the practicality of using a broker. On our user-friendly platform, you can browse more than 60 certified projects categorized by type, country and even Sustainable Development Goal, and choose the carbon offsets most suited to your expectations.
Then, you can get in touch with the developer via direct message if needed, or simply purchase your credits through the platform. ClimateTrade is based on blockchain technology, which means that all your transactions are traceable: after concluding a payment, you will automatically receive a personalized certificate with project information and a blockchain key. This ensures that your money actually ends up in the project you have chosen to support.
To buy carbon credits on the ClimateTrade marketplace:
- Go to the marketplace registration page
- Log in or create an account by filling out a simple form
- Browse projects freely or filter them by type, certification standard, country or SDG
- Select the number of carbon credits you want to buy
- Go to check-out and make your payment
- Automatically receive your traceable carbon offsetting certificate
Let your clients offset your carbon footprint
ClimateTrade also offers an API and Widget that can be easily integrated into your own payment system, letting your clients offset the carbon footprint of your products and services as they make their purchases.