What is a Carbon Credit Certificate? Prices, Trade Exchange, Brokers & the Offset Market

A carbon credit certificate is a certificate that gives a company the right to release one ton of carbon dioxide emissions per one ton of carbon dioxide emissions reduced. Carbon credit certificates are bought and there are two main types of certificate standards. They can be Kyoto Protocol standards or voluntary standards.

The Kyoto Protocol standards developed the idea of trading carbon emissions. The concept was that countries with high emission levels could buy carbon credits from developing countries so that they could meet their obligations in emission reductions. It would also help developing countries by having green technologies delivered to them by developed countries. The corporations and institutions that follow Kyoto Protocol standards participate in the compliance or mandatory carbon market.

The voluntary carbon standard, now called verified carbon standard (VCS) provides norms that measure, monitor, and validate projects in the voluntary carbon market. The demand for trading credits in the voluntary market is smaller than in the demand in the compliance market, so the carbon-offset credits tend to be cheaper

Carbon Credit Trade Exchange

The carbon trade exchange is an organization that supports the trading of carbon credits in the voluntary and United Nations Clean Development Mechanism (CDM) market. The United Nations CDM permits carbon emission-reduction projects in developing countries to receive certified emission reduction (CER) credits. These credits can be traded and sold, and then used by industrialized nations to a meet their emission mandatory targets under the Kyoto Protocol. The credit trade exchange offers a transparent and easy way for businesses to participate in the international marketplace of trading carbon credits.

Carbon Credit Prices

Prizes for trading carbon credits vary widely. They can range from $3 to more than $20 per credit. One carbon credit is equal to 1 ton of carbon dioxide emissions reduced. The lack of demand from industrialized countries to seek projects in developing countries causes an excess in carbon credits supplied by the CDM. Worldwide recession in these nations is the major cause for the decline in interest for seeking green projects.

Carbon Credit Brokers

Brokers in the carbon trading market can help corporations and institutions with vital information and experience in pursuing the necessary requirements for acquiring carbon credits. Brokers will search for competitive prices in the voluntary emissions reduction markets and will facilitate carbon trading by linking suppliers with potential buyers.