Carbon credits, also known as verified emission reductions or carbon offsets, are generated from projects that demonstrate a reduction or avoidance of greenhouse gas emissions (GHGs). Carbonfund.org Foundation, a 501(c)(3) nonprofit organization, has supported more than 190 carbon credit, renewable energy certificate (RECs), and tree planting projects since its founding in 2003, including four signature projects with its subsidiary CarbonCo, LLC.
Carbon credits can be generated from a wide range of energy efficiency, renewable energy, and forestry projects. For example, these offsets have been offered from solar photovoltaic, run-of-river hydroelectric, landfill gas-to-energy, and wind farms, along with forest conservation, forest restoration, and distribution of compact fluorescent lightbulbs (CFLs). According to Ecosystem Marketplace’s annual State of the Voluntary Carbon Markets reports, the most popular voluntary offsets are often from either Reducing Emissions from Deforestation and forest Degradation (REDD+) projects or wind projects.
In addition, there are also a variety of third-party certification standards under which carbon credits can be independently validated and verified. These carbon certification standards include, but are not limited, to the:
- American Carbon Registry (ACR);
- Climate Action Reserve (CAR);
- Gold Standard;
- Plan Vivo; and the
- Verified Carbon Standard (VCS).
The Verified Carbon Standard, administered by the Washington, DC-based nonprofit organization Verra, is the most widely used voluntary carbon standard and thus, VCS carbon credits are the most popular carbon credits. Oftentimes, VCS forestry projects are also designed, validated and verified against the co-benefit standard known as the Climate, Community & Biodiversity Standards (CCBS).
It should also be noted that some carbon offsets may be used in compliance carbon markets, such as the Regional Greenhouse Gas Initiative (RGGI) or the California Emission Trading Scheme, while others may be used in the voluntary carbon market.