Carbon credits are primarily issued by international bodies and independent standard-setting organizations that regulate and verify emission reduction projects worldwide. These entities ensure that each credit represents a verified reduction or removal of one metric tonne of carbon dioxide equivalent (tCO2e) from the atmosphere.
Key Issuers of Carbon Credits
While the concept of carbon credits encompasses various types, the issuance is consistently managed by authoritative organizations to maintain integrity and credibility.
1. United Nations Framework Convention on Climate Change (UNFCCC)
The UNFCCC is a prominent issuer, particularly through its Clean Development Mechanism (CDM). Under this mechanism, the UNFCCC issues Certified Emission Reductions (CERs). These units are precisely measured in tonnes of CO2 equivalent and originate from projects in developing countries that reduce greenhouse gas emissions. Anyone can purchase these CERs to compensate for their own emissions or to support these vital climate action projects.
2. Independent Standard-Setting Organizations (Voluntary Carbon Market)
Beyond the UNFCCC, several independent organizations have developed robust standards for carbon credit projects in the voluntary carbon market. These organizations set stringent methodologies, oversee project validation and verification, and ultimately issue carbon credits.
- Verra (Verified Carbon Standard - VCS): One of the largest and most recognized standards, Verra issues Verified Carbon Units (VCUs). These credits come from a vast range of project types, including forestry, renewable energy, and waste management.
- Gold Standard: Known for its high standards in sustainable development, the Gold Standard issues credits from projects that not only reduce emissions but also contribute to social and environmental co-benefits.
- American Carbon Registry (ACR): A leading carbon offset program in the United States, ACR issues credits from diverse project types, often focusing on new and innovative methodologies.
- Climate Action Reserve (CAR): Operating primarily in North America, CAR develops rigorous, science-based protocols for quantifying, verifying, and registering carbon reductions.
3. Governmental Bodies (Compliance Carbon Markets)
In compliance carbon markets, governments or regional authorities establish regulations that cap emissions for specific industries or sectors. While these systems often involve "allowances" (permits to emit) that are allocated or auctioned, they may also allow the use of carbon credits (offsets) generated from approved projects to meet compliance obligations. In such cases, the government body or its designated authority is responsible for approving and tracking the use of these credits.
- European Union Emissions Trading System (EU ETS): The largest compliance market globally, where member states' authorities manage the allocation and trading of EU Allowances (EUAs). They may also approve the use of certain international offsets under specific conditions.
- California Air Resources Board (CARB): Manages California's Cap-and-Trade Program, issuing allowances and approving the use of California Carbon Offsets (CCOs) generated from specific project types.
How Carbon Credits are Issued
The process of issuing carbon credits involves several critical steps to ensure their integrity:
- Project Development: A project (e.g., a wind farm, a reforestation initiative, or a methane capture facility) is designed to reduce or remove greenhouse gas emissions.
- Methodology Selection: The project developer selects an approved methodology from a standard-setting body (like Verra or Gold Standard) that accurately quantifies the emission reductions.
- Validation: An independent third-party auditor (validator) reviews the project design document to confirm it meets the standard's requirements and that its claimed reductions are plausible.
- Registration: Once validated, the project is registered with the respective standard-setting body.
- Monitoring: The project's actual emission reductions are continuously monitored over time.
- Verification: Another independent third-party auditor (verifier) periodically checks the monitored data to confirm the actual emission reductions.
- Issuance: Upon successful verification, the standard-setting organization issues the corresponding number of carbon credits into a registry account held by the project developer.
Table of Major Carbon Credit Issuers and Their Credits
| Issuer Type | Primary Issuing Body | Type of Carbon Credit | Market Focus | Purpose of Credit |
|---|---|---|---|---|
| International (UN) | UNFCCC | Certified Emission Reductions (CERs) | Compliance (historically) & Voluntary | Offset emissions, support sustainable development in developing countries. |
| Independent Standards (Voluntary) | Verra | Verified Carbon Units (VCUs) | Voluntary | Offset emissions, support a wide range of climate action projects globally. |
| Gold Standard | Gold Standard Verified Emission Reductions (GS VERs) | Voluntary | Offset emissions, deliver measurable sustainable development benefits. | |
| American Carbon Registry (ACR) | Emission Reduction Tons (ERTs) | Voluntary | Offset emissions, particularly in North America, fostering innovative project types. | |
| Climate Action Reserve (CAR) | Climate Reserve Tonnes (CRTs) | Voluntary | Offset emissions, focused on rigorous, science-based protocols, primarily in North America. | |
| Governmental Regulators (Compliance) | European Commission (via Member States) | EU Allowances (EUAs), approved international offsets | Compliance (EU ETS) | Meet mandatory emission reduction targets for regulated entities. |
| California Air Resources Board (CARB) | California Carbon Offsets (CCOs) | Compliance (CA Cap-and-Trade) | Meet mandatory emission reduction targets for regulated entities within California, from approved project types. |
Understanding who gives carbon credits clarifies the robust framework designed to ensure that these units genuinely represent real, measurable, and verified emission reductions, contributing to global climate action.
