A carbon credit is a tradable certificate representing a reduction of one ton of carbon dioxide or other CO2 mass-equivalent greenhouse gas (GHG). Carbon credits and carbon markets are both regulated and voluntary components of international efforts to mitigate increasing GHG concentrations in the atmosphere. Carbon trading is an incentive-based emissions trading approach to GHG reductions. EASI specializes in development of soil- and forest-based carbon sequestration projects.
About Carbon Credits — U.S. Regulated Markets
The world of carbon emission reductions, sequestration and offsets — the world of carbon and greenhouse gas credits — is a complex one.
The European Union Emissions Trading System (EUETS) is a cap-and-trade mechanism that is the cornerstone of European greenhouse gas reduction policy. EUETS began in 2005 and is the first large greenhouse gas emissions trading scheme in the world. There are 31 participating countries—all 28 EU member states plus Iceland, Norway, andLiechtenstein.
In the U.S. regulated GHG reduction programs occur in the Northeast region and in California. The
![RGGI regulated states (dark green) and observers. Source: By The original uploader was Cg-realms at English Wikipedia [GFDL or CC-BY-SA-3.0], via Wikimedia Commons](http://dev.easillc.com/wp-content/uploads/2016/04/RGGI-Map-300x296.png)
RGGI participating states award offset allowances in five project categories that are designed to reduce or sequester emissions of three greenhouse gases: carbon dioxide (CO2), methane (CH4), and sulfur hexafluoride (SF6).
Currently, RGGI’s five eligible offset categories include projects that: 1) capture or destroy CH4 from landfills 2) reduce emissions of SF6 from electricity transmission and distribution equipment 3) sequestration of carbon due to U.S. forest projects (reforestation, improved forest management, avoided conversion) or afforestation (for CT and NY only) 4) reduce emissions of CO2 through non-electric end-use energy efficiency in buildings 5) avoid CH4 emissions through agricultural manure management operations. Offset projects must be located within one of RGGI’s participating states.
The California Cap-and-Trade Program is a key compliance mechanism for the State’s Global Warming Solutions Act, AB 32. The program is managed by the State Air Resources Board. Trading creates incentives to reduce 
GHGs below allowable levels through investments in clean technologies. With a carbon market supported by auctions and trading, a price on carbon is established for GHGs. Market forces spur technological innovation and investments in clean energy.
Proceeds from the CA Cap-and-Trade Program are used by the State to invest in programs and projects that further the objectives of the California Global Warming Solutions Act of 2006. The investments reduce greenhouse gas emissions, deliver benefits to disadvantaged communities, and optimize economic, health, and environmental co-benefits.
Annual Reports to the California State Legislature on Cap-and-Trade Auction Proceeds can be found here.
About Carbon Credits — Voluntary Markets
The voluntary carbon market encompasses all payments — whether by eco-minded individuals, non-profits or corporations — for third-party greenhouse gas emissions reductions occurring outside of mandated government programs. Since carbon is a global pollutant, these offsets may be sourced from anywhere in the world so long as they satisfy carefully crafted requirements that ensure the long term reduction or sequestration of greenhouse gases. The voluntary carbon market often serves as a testing ground for project types and monitoring methodologies that are eventually adopted in compliance-driven, regulated carbon markets where emissions are capped or taxed. It also creates a space for “first movers” to act ahead of national or international climate policy.
The New Frontier — Wetland, Soil & Forest Carbon Sequestration
The voluntary carbon market encompasses all payments — whether by eco-minded individuals, non-profits or corporations — for third-party greenhouse gas emissions reductions occurring outside of mandated government programs. Since carbon is a global pollutant, these offsets may be sourced from anywhere in the world so long as they satisfy carefully crafted requirements that ensure the long term reduction or sequestration of greenhouse gases. The voluntary carbon market often serves as a testing ground for project types and monitoring methodologies that are eventually adopted in compliance-driven, regulated carbon markets where emissions are capped or taxed. It also creates a space for “first movers” to act ahead of national or international climate policy.
Many ecosystems convert atmospheric CO2 into plant and soil carbon above and below the ground achieving additional benefits of improved biodiversity, water quality, and food security and energy security. The graphic above (courtesy of The Earth Partners) illustrates the relative efficiency of various ecosystems at storing (sequestering) carbon both above and below ground. The role of wetlands in this process has been underestimated until recent efforts to measure wetland carbon uptake and storage sequestration were completed. Based on these results a wetlands carbon sequestration protocol.
The Verified Carbon Standard and the Climate Action Reserve, often working together, serve as standards-setting institutions supporting the voluntary carbon market. The CAR manages carbon offset projects, oversees independent third-party verification bodies, issues carbon credits generated from such projects and ‘tracks the transaction of credits over time in a transparent, publicly-accessible system.’ Sequestration methods have been approved for rice, grasslands & livestock biogas, forests and wetlands.
