How to Sell Carbon Credits

how do you buy carbon credits

Selling carbon credits is a way to help businesses that routinely engage in carbon-intensive activities to manage their carbon footprint. This includes businesses that focus on electricity generation and transmission, transportation and manufacturing. In general, each carbon credit sold transfers the right to emit one metric ton of carbon dioxide or the equivalent mass of another greenhouse gas, such as methane or nitrous oxide.

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How Carbon Credit Selling Works

Carbon credit sales and purchases flow through the Chicago Climate Exchange, a trading platform similar to the New York Stock Exchange. Each credit sold gives the purchasing company the right to emit one metric ton of greenhouse gases into the environment. Once the CCX verifies and registers actual emissions, those who do not reach the maximum allowed emissions, such as woodland owners, logging businesses, farms and solar energy businesses, can sell excess credits to companies that exceed allowable emissions.

Connect With an Offset Aggregator

Small businesses and individuals selling carbon credits typically work through a broker, called an offset aggregator, instead of working directly with the CCX. The reason is that the income small sellers realize from selling carbon credits most often does not offset the costs of joining and doing business directly with the CCX. Contact the CCX to locate an approved offset aggregator specific to

your industry. Once you sign a contract, the aggregator, who is responsible both to you and to the CCX, “bundles” multiple small projects into one large project and handles all carbon credit sales.

Project Setup

Work with an offset aggregator to enroll your property or business as an offset project. You will need to verify that your land or business meets CCX eligibility criteria specific to your industry. For example, woodland owners and forestry businesses must have clear title to the land and be actively participating in a sustainable forest management program. You will also need to meet CCX guidelines for measuring, calibrating and recording greenhouse gas emissions to determine how many credits you will have available to sell.

Verification and Sale

Because the CCX only accepts carbon credit sales in 10,000 metric ton increments, most offset aggregators sell credits quarterly or annually. How much you receive depends on the number of one-metric-ton credits sold, the current market rate for carbon credits specific to your industry and the fees your aggregator charges. In some industries, such as forestry, the CCX may place 20 percent of sale proceeds in a reserve pool as insurance against a natural disaster, drought or disease that may result in increased emissions being released into the environment. Excess reserve pool funds are released when your contract expires.

Source: ehow.com

Category: Credit

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