Credits
Types of credits:
CERs
Certified Emission Reductions (CERs) were created under the Kyoto Protocol’s Clean Development Mechanism (CDM) to allow industrialized countries to invest in emission reducing projects in developing nations. The CDM projects generate CERs, credits which can then be used to offset emissions on the EU ETS. Once a CER has been issued it carries the same compliance value as an EUA.
CER credits are highly regulated and must meet a number of criteria as defined by the CDM and the Kyoto Protocol. The emissions reductions must be real, measurable, permanent, additional to what is already being done, and independently verified.
EUAs
These are the emission allowances given to participants in the EU ETS and are traded in a secondary market on the European Climate Exchange (ECX). One EUA gives the holder the right to emit one tonne of CO2. Approximately 2.3bn EUAs have been issued annually to industries covered under the EU ETS.
Trading these credits enables companies to meet emissions limits and enables environmentally friendly projects to profit. This market based approach benefits the environment and businesses.
VERs
VERs are credits derived from a wide-range of project types, from small scale community driven projects, to large renewable energy projects.
The VER market is growing. In 2008, 123.4 million metric tones of CO2 were transacted, a near doubling of the 2007 volume. VER prices then increased by 20% in 2009, and the market was valued at US$705 million, with annual growth of 15% projected. By 2013, the carbon market is projected to be worth US$669 billion.
VERs are generated by projects verified by a third party, but without the costs associated with CERs, which are a type of carbon credit subject to much more stringent regulation, pushing up the price. This means that individuals and companies can reduce their emissions in a more efficient and cost effective way. Despite there being less regulation, VERs are still subject to a standard, and emissions reductions must be real, measurable, permanent, additional to what is already being done, and independently verified.
Demand for VERs has built gradually, but there has recently been a shift to more structured growth, facilitated by the development of credible intermediaries such as the Bank of New York, which created a registry for VERs in June 2006, as well as the widespread acceptance of the minimum quality standard embodied by the Voluntary Carbon Standard (VCS), designed by the International Emissions Trading Association (IETA), and non-profit organizations The Climate Group and WWF.
There are three main drivers for demand in the voluntary market. Firstly, as a key component of a company's marketing strategy, linked to corporate social responsibility. Secondly, as a profit-making enterprise where financial participants build portfolios of VERs in order to speculate in this market. Thirdly, as a valuable learning exercise for forward-looking companies in business sectors which anticipate being included in a future compliance regime, and which wish to develop a competitive advantage through familiarity with carbon credit market mechanisms.
The general market requirement as a minimum standard is the Voluntary Carbon Standard (VCS) which ensures additionality, and uses as a basis several of the additionality tests required in the compliance regime. This is typically supplemented by internal criteria designed by Buyers, which will vary based on their individual focus on community involvement, technology transfer, host country impact, etc.
VERs trade over the counter and on some exchanges such as the Chicago Climate Exchange (CCX). This is giving structure to the market, and helping it grow.
360investgroup source and trade VERs from third party verified projects, and offer them to our clients at well below market value.
For example, BA charge £11.70 per credit, Clear Offset charge £15.49, 360investgroup charge just £5. The potential for profit is in that price difference.
Gold Standard
360investgroup use only Gold Standard and VCS Verified credits.
Gold Standard credits (GS-CER and GS-VER) are offered for sale in markets established by the Kyoto Protocol as well as the voluntary offset markets. They are certified by the Gold Standard Foundation, a non-profit organization that has trademarked the Gold Standard Label, which is today internationally-recognized as the leading indicator of quality in carbon markets.
Supporters of the Gold Standard are committed to promoting sustainable development through carbon offset markets that are characterized by transparency and equality of access for all market participants. It was designed to ensure that emissions reductions that back up carbon credits are not only real and verifiable, but that the project activities make a measurable impact on sustainable and social development in local communities.
The Gold Standard logo is a trademarked brand that represents premium quality in the carbon market.
