Carbon Mitigation 101

Carbon Mitigation Credits (Offsets) Made Easy

What are carbon mitigation credits (offsets)? In their simplest form, they are a cost-effective way to reduce the negative environmental impact of one’s greenhouse gas emissions.

What are carbon mitigation credits (offsets)? In their simplest form, they are a cost-effective way to reduce the negative environmental impact of one’s greenhouse gas emissions.

While it’s important to strive for internal emission reductions within one’s own control, a majority of facilities, companies and industries will reach a point when it’s more cost-effective to leverage the emissions efficiency of others. Also, few companies will find themselves in a position to be entirely carbon neutral (i.e. having no negative greenhouse gas impact whatsoever) while still “keeping the lights on” in its operation.

Enter carbon mitigation credits (offsets). A mitigation credit is an environmental attribute or benefit that is generated at one facility and subsequently transferred to another entity. This benefit is typically realized at a lower cost than the receiver would be able to achieve by reducing emissions by the same amount internally.

By investing in emission reduction projects outside their own walls instead of internally, these environmentally-conscious entities achieve the exact same environmental benefits. In doing so, they can lower their cost of reducing emissions and can even negate their negative impact completely – something virtually impossible to achieve by relying only on internal reductions.

Measuring Carbon Mitigation

The world of mitigation credits can be confusing and complicated. It has been said that quantifying carbon mitigation is equivalent to measuring the absence of a colorless, odorless gas (which is often entirely accurate).

Although all mitigation credits are measured in metric tonnes of carbon dioxide equivalent (tCO2e), it sometimes seems this is where the similarities among types of credits ends.

Criteria All Credits Must Meet

All carbon mitigation credits share some common qualities, despite their many differences:

  • Real. Every credit must represent a real emission reduction that has occurred.
  • Permanent. Generally speaking, credits should not be based on emission reductions that can be undone. In cases where a reversal is possible (terrestrial sequestration, for example), proper assurances should be provided to adequately account for a reversal risk.
  • Measurable. Sufficient monitoring of greenhouse gas sources, sinks and reservoirs must occur such that emission reductions are quantifiable to a high degree of confidence.
  • Verifiable. Sufficient data quantity and quality must be present to ensure that an unbiased third party can verify the occurrence and the accuracy of emission reductions.
  • Surplus. Reductions achieved must be above and beyond what is required by law or regulation. Those emission reductions that are achieved as a result of regulations (related to greenhouse gases or not) do not qualify as carbon mitigation credits.
  • Additional. Carbon mitigation credits must result from emission reductions that would not have otherwise occurred in the course of business as usual.
  • Real. Every credit must represent a real emission reduction that has occurred.
  • Permanent. Generally speaking, credits should not be based on emission reductions that can be undone. In cases where a reversal is possible (terrestrial sequestration, for example), proper assurances should be provided to adequately account for a reversal risk.
  • Measurable. Sufficient monitoring of greenhouse gas sources, sinks and reservoirs must occur such that emission reductions are quantifiable to a high degree of confidence.
  • Verifiable. Sufficient data quantity and quality must be present to ensure that an unbiased third party can verify the occurrence and the accuracy of emission reductions.
  • Surplus. Reductions achieved must be above and beyond what is required by law or regulation. Those emission reductions that are achieved as a result of regulations (related to greenhouse gases or not) do not qualify as carbon mitigation credits.
  • Additional. Carbon mitigation credits must result from emission reductions that would not have otherwise occurred in the course of business as usual.

All Credits Not Created Equal

Although every carbon mitigation credit represents 1 tCO2e, all credits are not created equal. So, how do they differ? Ultimately, each unique purchaser determines which credit qualities are most valuable to them. Here are some examples:

Project Type / Methodology

There are hundreds of ways to reduce emissions and quantify such reductions as carbon mitigation credits, from methane abatement at landfills to improving forest management practices and everything in between. Each year, more and more methodologies are adopted by leading standards as new, innovative approaches to climate change mitigation are discovered and applied.

Bluesource has participated in these market development efforts by drafting over 30 new methodologies as well as assisting mitigation credit standards by serving on working groups as they develop new methodologies.

Standard

A mitigation credit standard is a system of qualifications against which an credit is certified. Each standard specifies a set of rules that must be followed in order to achieve certification, such as how to assess project additionality, what project types are acceptable, which third party firms may conduct verifications, requirements for social and environmental co-benefits, and project start date requirements.

Our projects are certified to one of the highly reputable standards shown below:

  • Climate Action Reserve (CAR)
  • Verified Carbon Standard (VCS)
  • American Carbon Registry (ACR)
  • The Gold Standard
  • Alberta Emission Offset Registry (AEOR)
  • California Air Resources Board
  • Pacific Carbon Standard
  • Canadian Standards Association (CSA) CleanProjects and Reductions Registries
Vintage

Like wine, every mitigation credit has a vintage year, which is the year in which the emission reduction actually occurred. For example, a credit created by the destruction of landfill gas in 2012 is deemed to be a vintage 2012 credit.

Public Registration

All high-quality mitigation credits are given unique serial numbers and are tracked by registries that are approved by reputable standards.

These registries track the movement and retirement of credits to ensure market integrity. They also make certain information publicly available, which lends transparency to the mitigation credit market.

Our credits are registered using the following registries:

  • Markit Environmental Registry
  • APX
  • Canadian Standards Association (CSA)
  • Alberta Emission Offset Registry (AEOR)
  • Compliance Instrument Tracking System Service