Carbon credit has become an essential mechanism for mitigating the effects caused by carbon emissions. greenhouse gases. Therefore, it is considered increasingly important in the global economy.
Do you know what carbon credits are and how they work? global market? In this article, we explain its importance and show how iFood offsets its emissions.
What is carbon credit?
Carbon credit is a digital certificate that proves that a certain amount of carbon has stopped being emitted into the atmosphere by companies, projects and countries in one year.
This means that the more a company, project or organization stops emitting greenhouse gases into the atmosphere, the more credit it will have to negotiate with organizations and countries that pollute the most.
Carbon is the abbreviation for carbon dioxide (CO2), also known as carbon dioxide. It accelerates the greenhouse effect, responsible for global warming.
How did carbon credits come about?
Also called Certified Emission Reductions, the concept of carbon credit emerged in 1997 with the Kyoto Protocol, during the UN Climate Convention, in Japan.
Following the entry into force of the Kyoto Protocol in 2005, the global carbon market was established, made up of different regional or national markets.
The global carbon market was also formed by emission-reducing projects such as the Clean Development Mechanism (CDM) and Joint Implementation (CI).
Carbon credit: how does it work?
Carbon credit works as follows: countries that reduce or stop emitting carbon dioxide generate tradable credits.
When it meets its goals of reducing emissions by one ton of carbon, the country receives a certification issued by the Clean Development Mechanism (CDM).
The more you reduce emissions, the more credits the country will have to negotiate with countries that failed to reach their reduction targets.
These credits are acquired by the most polluting companies or countries as a way of compensating for the excessive emission of greenhouse gases into the atmosphere.
Reforestation, use of clean energy and policies environmental preservation These are some actions to reduce greenhouse gas emissions into the atmosphere.
How much is a carbon credit worth?
Every ton of CO2 that is no longer emitted is equivalent to a carbon credit. A carbon credit is worth approximately US$ 5 or R$ 26 in Brazil.
The global carbon credit price, however, can range from US$ 1.20 to US$ 40 per ton of carbon, depending on the market being traded.
The average price in the world is US$ 37, according to Bioeconomy Observatory from Fundação Getúlio Vargas (FGV), which monitors carbon pricing.
Carbon credit value per hectare
One hectare of forest absorbs up to 10 metric tons of carbon dioxide. This means cubic meters, that is, 10 times 3, which totals 30 tons.
The value of a carbon credit is equivalent to 1 ton of carbon. So, 1 hectare generates 30 carbon credits. A carbon credit costs, on average, US$ 5.
Advantages and disadvantages of carbon credit
Carbon credit is a mechanism to curb excess greenhouse gas emissions, which are responsible for global warming.
Among the advantages of carbon credits are the reduction of GHG emissions and the guarantee of compliance with reduction targets through the purchase of credits by polluting countries.
Furthermore, there may be an incentive in countries with high forest coverage, such as Brazil, to develop projects to generate credits from standing forests.
Understand the carbon credit rules
The carbon credit rules were defined during the COP 26, 2021 United Nations Climate Change Conference, Glasgow, Scotland.
The more than 190 participating countries defined the implementation of two instruments that help with cooperation to achieve GHG emissions reduction objectives.
These objectives are defined by national climate action plans, or Nationally Determined Contributions (NDC) of the article 6 of the Paris Agreement.
Two instruments involve cooperation for the transfer of emissions mitigation between countries, from the one that managed to reduce to the country that can acquire the reduction.
In this sense, countries that were unable to meet reduction targets can purchase credits from countries that managed to meet or exceed targets.
How to sell carbon credits?
There are two types of carbon credit markets in the world: the voluntary market and the regulated market, which is restricted to some specific countries and sectors.
In the market regulated by governments, there is an obligation to reduce and/or offset GHG emissions and the price per ton of carbon is defined by a regulatory body.
In the voluntary market, made up of companies, organizations and individuals, the price is negotiated in contracts according to a given project.
Carbon credit bonds can be traded directly between the project owner and the buyer or indirectly through the secondary market regulated by the Stock Exchange.
How to generate carbon credits?
Carbon credits can be generated by Reducing Emissions from Deforestation and Degradation (REDD) or Clean Development Mechanism (CDM) projects.
People interested in generating carbon credits must hire a company or environmental professionals to measure the GHG reduction generated by a project.
It is also necessary to consult a specialized company for the sale of assets, since there are no clear and defined rules for the Brazilian market.
How to certify carbon credit?
According to the CredCarbo, a company specializing in carbon credits, there are seven steps to certifying carbon credits.
Are they:
- Project Design Document;
- Validation of the project in accordance with the CDM;
- Approval of documents by national authority;
- Submission to the CDM Executive Board;
- Project evaluation and monitoring;
- International certification and verification;
- Obtaining Certified Emissions Reduction.
How iFood buys carbon credit
iFood, National Bank for Economic and Social Development (BNDES), Bank of Brazil, Boticário Group, Nature It is United There are some companies that buy carbon credits.
The objective is to offset greenhouse gas emissions in the atmosphere from the company's operations, as does iFood, which has neutral deliveries with the acquisition of carbon credits.
In 2021, iFood became offset all emissions in advance of your deliveries. Compensation was made through the purchase of carbon credits that benefited forest conservation projects focused on combat to deforestation in the Amazon.
In the second half of that year, around 1.2 million square meters of forest were protected — the equivalent of 125 official football fields.
In 2022, the Carbon credits used to offset emissions are now also allocated to energy generation projects renewable energy and actions to prevent the release of methane gas (which is also involved in global warming).
