Blog Details:

BASIC STEPS FOR CARBON CREDITS 

The procedure for carbon credit generation, registration, and trading involves several key steps, including project development, validation/verification, issuance, trading, and retirement. First, a project is developed and registered with a carbon standard. This involves estimating the project's climate impact and assessing it against the carbon standard's requirements. Next, an independent third party validates the project to ensure it meets the standards. Once validated, the project is verified, and carbon credits are issued, representing the verified emission reductions or removals. These credits can then be traded in a market or used to offset emissions. A carbon credit represents the right to emit one ton of carbon dioxide or its equivalent in other greenhouse gases. The concept originated from the Kyoto Protocol in 1997, which aimed to reduce global emissions. In India, the carbon credit market has gained momentum, especially after the introduction of the Perform, Achieve and Trade (PAT) scheme and the National Action Plan on Climate Change (NAPCC). 

Steps include: 

1. Project Development and Registration: • Develop a project that reduces or removes greenhouse gas emissions (GHGs). • Create a Project Design Document (PDD) outlining the project's methodology, objectives, and emissions reduction calculations. This includes Baseline scenario analysis, Monitoring plan, Stakeholder consultation. • Choose a carbon standard and register the project with the standard. 

2. Validation/Verification: • The project is independently validated to ensure it meets the carbon standard's requirements and methodologies. • Verification involves assessing the project's actual GHG emissions reductions or removals. • An accredited verification body may conduct field inspections and document reviews. 

3. Carbon Credit Issuance: • Once validated and verified, the project is eligible for carbon credit issuance. • A carbon standard issues carbon credits equal to the quantity of verified emissions reductions or removals. • These credits are typically deposited into a registry system maintained by the carbon standard. 

4. Trading and Sale: • Project developers can sell the issued carbon credits in a market (e.g., voluntary or compliance markets). • After they are issued, carbon credits can be transferred into different accounts in a crediting program’s registry. Transfers are usually undertaken as a result of a purchase or trade. Carbon credit buyers may then use the carbon credits by retiring them, holding them, or transferring them to other accounts. Carbon credits may change hands multiple times before they are ultimately retired and used. • Buyers, such as companies seeking to offset their emissions, can purchase these credits. • Credits may also be retired by the project developer or buyer for carbon neutrality claims. 

5. Retirement: • Carbon credits are retired to ensure they are not used to offset emissions more than once. • Retirement involves permanently cancelling the credits in the registry system. • This prevents double-counting of emissions reductions and ensures the integrity of the carbon market. • Carbon credits must be “retired” to use them and claim their associated avoided emissions or enhanced removals. Retirement occurs according to a process specified by each crediting program’s registry. Once a carbon credit is retired, it cannot be transferred or used, meaning it is effectively taken out of circulation. (Note: some crediting programs use the term “cancellation” instead of “retirement”. Functionally, they are the same, although “cancellation” more often refers to taking credits out of circulation without them being claimed or used). 

Various Certification Standards/Registries are: 

• Verified Carbon Standard (VCS)

 • Gold Standard 

• Clean Development Mechanism (CDM) 

• Universal Carbon Registry (UCR)

 • Carbon Registry India (CRI) 

*The above-mentioned steps will specifically vary based on which standard/Registries are chosen for Carbon credit registration, trading and transfer etc.