Voluntary carbon credit markets

With more awareness of climate change and the damage to the environment, more companies and individuals are mindful of their carbon footprint and want to do more for the environment. Hence, the growing trend in the voluntary carbon credit markets.

1 carbon credit here is equivalent to 1 ton of CO2 without any maturity. Basically, a green project that is undertaken to reduce CO2 can sell this carbon credit which the buyer will use it as an offset for their carbon emissions as illustrated.

Once these carbon credits are used and offset by the buyer, these carbon credits are retired and will be canceled from the carbon registry. No further trading can be done for that canceled carbon credit.

Fig. 7: Voluntary Carbon Credits

Voluntary carbon credit markets are not companies merely cutting their own carbon emissions but companies indirectly investing in green projects elsewhere that absorb or reduce CO2 such as planting of trees, reforestation, solar, wind energy farms, supporting methane reduction from landfills, etc. These green projects remove CO2 from our atmosphere, delivering negative emissions which result in a positive effect on the environment.