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The Carbon Essentials - EN-A-5-6

Offset protocols outline the rules and calculations for generating offset credits from projects aimed at reducing emissions. The value of offset credits varies based on market demand, project type, and perceived quality, with compliance market credits generally priced higher than voluntary market credits. GHG offset registries provide transparency by tracking project details and credit transactions, ensuring accountability and credibility in the offset system.

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8 views2 pages

The Carbon Essentials - EN-A-5-6

Offset protocols outline the rules and calculations for generating offset credits from projects aimed at reducing emissions. The value of offset credits varies based on market demand, project type, and perceived quality, with compliance market credits generally priced higher than voluntary market credits. GHG offset registries provide transparency by tracking project details and credit transactions, ensuring accountability and credibility in the offset system.

Uploaded by

internetuser2098
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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WHAT IS AN OFFSET PROTOCOL?

Offset protocols can be thought of as the “recipe” for an offset project. The protocol specifies eligible project
activities and gives detailed instructions for how to calculate the number of offset credits generated by the
project. Protocols have clear rules for how to set the project baseline (the emissions levels before the project,
also known as the “business-as-usual” scenario). They also set out rules for data collection and monitoring, as
well as assessing and managing project risks. Offset protocols are generally designed so that the quantification
of reductions and removals achieved by the offset project is conservative and does not lead to over-estimates.

Compliance vs voluntary market:


Offset credits from systems targeted towards the
compliance market generally sell at a higher price
because they can be used to meet regulations for
emissions reductions. Offset credits geared towards
the voluntary market generally sell at lower price.

Type of project generating the offset credit:


WHAT IS AN OFFSET CREDIT Some offset credit buyers, particularly in the
voluntary market, choose to buy credits from
WORTH? projects that provide other benefits (like biodiversity
or community development), are located in a certain
The value of an offset credit fluctuates over time and
area, or have other specific characteristics. These
depends on several factors:
buyers may be willing to pay more for offset credits
from certain projects.
Supply and demand:
The price of offset credits is primarily influenced by Perceived quality of offset credits:
supply and demand. If there are many offset credits
The value of offset credits in the voluntary market
available with little demand, prices will be low. If there
depends on whether there is confidence that the
are few offset credits available and a large demand,
offset system has strong rules to ensure the projects
prices will be higher. The supply of GHG offset
and the credits they generate are of high quality.
credits will depend on the number of offset projects
that are generating credits, which is affected by
the availability of offset protocols, the investment in Rules to replace invalid credits:
offset projects, and the expected demand for offset Occasionally, an offset credit may be identified as
credits in the future. Offset projects can also take invalid after it is issued. This could happen because
time to start generating and supplying offset credits the credit was issued based on incorrect information
– up to several years depending on the project type. or because the stored carbon was later released.
Demand in the compliance market is influenced by Program administrators generally require that invalid
many factors including the stringency of emission credits be replaced. Offset systems may require
reduction regulations and the cost of other emission the project proponent or whoever owns the invalid
reductions. Demand in the voluntary market depends credit to replace it. Some offset systems also have
on the number of individuals and businesses making a pool of credits that can be used to replace invalid
voluntary commitments to reduce emissions and the credits in certain circumstances. Offset credits from
level of ambition of voluntary commitments. These systems that make the buyer replace invalid credits
factors make it challenging to predict offset supply, are usually sold at a lower price because there is
demand, and prices. more risk for the buyer.
WHAT IS A GHG OFFSET
REGISTRY?
Reputable offset systems make key information
about registered offset projects and offset credits
available to the public. A GHG offset registry
helps to track where projects are located, who has
registered a project and been issued offset credits,
whether the credits have been sold, whether the
credits have been used, and who used the credits.

Having this information publicly available helps


ensure that GHG offset systems are transparent,
accountable, and credible. Potential offset credit
buyers can check the registry to see that the offset
credits they are interested in purchasing have been
issued to the project, and have not already been
sold, or used by another buyer.

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