Understanding Carbon Offsets

Carbon Crediting Projects

Carbon credits can be produced by a variety of activities that avoid GHG emissions or enhance carbon removals. In most cases, these activities are undertaken as discrete “projects.” A carbon crediting project, for example, may involve:

  • Renewable energy development (displacing fossil-fuel emissions from conventional power plants);
  • The capture and destruction of high-potency GHGs like methane, N2O, or HFCs; or
  • Avoided deforestation (which can both avoid the emission of the carbon stored in trees, as well as enhance carbon removals as trees grow).

Projects can range in scale from very small (e.g., reducing a few hundred tonnes of CO2e per year) to very large (e.g., millions of tonnes reduced per year). Carbon credits are also sometimes produced by large-scale “programs of activities,”[1] which aggregate together many similar small projects or coordinated efforts across entire jurisdictions (such as in the case of avoided deforestation).[2]

In many cases, carbon crediting projects produce social and environmental benefits beyond just avoided GHG emissions or enhanced removals. Depending on the project type, these “co-benefits” can include improvements to community employment opportunities; enhanced air or water quality; biodiversity and habitat conservation; improved energy access; and better access to community health and education services. Many carbon credit buyers seek projects that yield a broad range of benefits. Carbon credits can thus be part of a comprehensive strategy for corporate social responsibility, combining efforts to address climate change with contributions to other public goods.

One challenge is that the types of projects that make for higher-quality carbon credits tend to be those with the fewest co-benefits – and vice versa (see Sticking to lower-risk project types).

For carbon crediting project terminology view the glossary.

Related pages:

Crediting Project Actors

Crediting Project Cycle

[1] Such “programs” were pioneered under the Kyoto Protocol’s Clean Development Mechanism; see here.

[2] See, for example, Verra’s framework for Jurisdictional and Nested REDD+ programs. (REDD stands for “reduced emissions from deforestation and forest degradation”.)