Understanding Carbon Offsets

Carbon Crediting Programs

Carbon credits are not a simple commodity. As with many products whose quality is difficult for casual buyers to assess, standard-setting organizations have been established to provide quality assurance for carbon credits. These carbon crediting programs[1] range from international or governmental regulatory bodies – such as the California Air Resources Board, which oversees carbon credits under the California cap-n-trade program – to independent non-governmental organizations (NGOs). Historically, governmental bodies certified carbon credits for regulatory purposes (“compliance programs”), while independent NGOs primarily served voluntary buyers (“independent programs”); more recently, both types of programs have begun to serve both types of markets (see Table, below). Each carbon crediting program issues its own labeled “brand” of credit.

Crediting programs perform three basic functions: (1) they develop and approve standards that set criteria for the quality of carbon credits; (2) they review crediting projects against these standards (generally with the help of third-party verifiers); and (3) they operate registry systems that issue, transfer, and retire carbon credits.

More detail on how carbon crediting programs seek to ensure the quality of carbon credits (along with some of their limitations) can be found in High Quality Credits.

Table: Examples of major carbon crediting programs

"Compliance" Carbon Offset Programs (Run by Governmental Bodies)Geographic CoverageLabel Used for Offset Credits
Clean Development Mechanism (CDM) 2Developing CountriesCertified Emission Reduction (CER)
California Compliance Offset ProgramUnited StatesAir Resources Board Offset Credit (ARBOC)
Joint Implementation (JI) 3Developing CountriesEmission Reduction Unit (ERU)
Regional Greenhouse Gas Initiative (RGGI)Northeast United StatesRGGI CO2 Offset Allowance (ROA)
Alberta Emission Offset Program (AEOP)Alberta, CanadaAlberta Emissios Offset Credit (AEOC)
"Voluntary" Carbon Offset Programs (Run by NGOs)Geographic CoverageLabel Used for Offset Credits
American Carbon RegistryUnited States, Some InternationalEmission Reduction Tonne (ERT)
Climate Action Reserve (CAR)United States, MexicoClimate Reserve Tonne (CRT)
The Gold StandardInternationalVerified Emission Reduction (VER)
Plan VivoInternationalPlan Vivo Certificate (PVC)
The Verified Carbon StandardInternationalVerified Carbon Unit (VCU)

Related pages:

Crediting Programs & Markets
Program Administration & Authority
Protocols & Standards
Registries & Enforcement
Compliance Crediting Programs
Independent Crediting Programs
Add-on Standards
United Nations Crediting Mechanisms

[1] The terms “standard” or “registry” are sometimes used when referring to crediting programs. However, a comprehensive carbon credit program will consist of more than just a standard and a registry.

[2] Although the CDM has functioned primarily as a regulatory program under the Kyoto Protocol, it now also caters to voluntary purchasers, and is in the process of transitioning to become the Article 6.4 mechanism.

[3] Like the CDM, “Joint Implementation” is a separate crediting program established under the Kyoto Protocol. The CDM applies only to UN-defined ‘developing’ countries, while JI is used in UN-defined ‘developed’ countries.