What is Carbon Credit?
Any project which is capable to remove/reduce 1 ton of CO2 or the equivalent amount of a Greenhouse gas from the atmosphere earns a Carbon Credit. In other words, Carbon Credit is a tradable Certificate for reducing 1 ton of CO2e (Greenhouse Gases) from the atmosphere.
Calculation of Carbon Credits (for all RE Projects in all mechanisms) Carbon Credits can be calculated by using the following formula:-
Plant Capacity x Number of hours per year x PLF (%) x Emission Factor (For Grid connected Renewable Energy Projects)
Market-based Mechanisms CDM (clean development mechanism)
Compliance Program Driven by - UNFCCC The CDM allows emission reduction projects in developing countries to earn certified emission reduction (CER) credits, each equivalent to one tonne of CO2 .These CERs can be traded or sold, and used by Developed countries to a meet a part of their emission reduction targets under the Kyoto Protocol.
ELIGIBITY CRITERIA- within 6 months from date of Purchase Order release to the vendor (major equipment) need to send the CDM Consideration form.
CURRENT STATUS- Currently CDM is accepting new registrations only on Provisional basis as they are seeking clarity on Paris Agreement Era which is effective from 1 January 2020.
VCS (Verified Carbon Standard)-
Voluntary Program Driven by – VCS Board Verified Carbon Standard Program allows certified projects to turn their greenhouse gas (GHG) emission reductions and removals into
tradable carbon credits. All the programs undergo extensive stakeholder consultation and expert review, and draw from four key components: standard, independent assessment, accounting methodologies, and registry.
ELIGIBILITY CRITERIA- Within 2 years from COD, DOE Validation report should be issued. The ideal time to apply is within one and a half year from COD.
CURRENT STATUS- VCS Program excludes registration of the projects that can reasonably be assumed to have generated GHG emissions primarily for the purpose of their subsequent reduction, removal or destruction. The VCS Program also excludes any Grid-connected electricity generation projects either large or small scale within an Non-LDC.
GS CER/VER Gold Standard –
Voluntary program Driven by- GS Board Gold Standard was established in 2003 by World Wide Fund for Nature (WWF) and other international NGOs to ensure projects that reduced carbon emissions featured the highest levels of environmental integrity and also contributed to sustainable development. With the adoption of the Paris Climate Agreement and the Sustainable Development Goals, Gold Standard launched a best practice standard for climate and sustainable development interventions.
ELIBILITY CRITERIA- the Project shall complete Validation (defined as the date of submission of Validation Report by the Validation and Verification Body) within two years of successful listing of the project. Retroactive Projects shall submit for Preliminary Review within one year of the Project Start Date.
CURRENT STATUS- Currently Gold Standard is not accepting any new registrations.Biomass, Waste to Energy, and small hydro projects having technology penetration less than 5% can qualify for GS Registration.
GCC(Global Carbon Council)-
Voluntary program Driven by- GORD, Qatar The Global Carbon Council (GCC), an initiative of Gulf Organization for Research and Development (GORD), is a voluntary carbon offsetting program that aims to assist the organizations reduce their carbon footprints, help
sectoral economy to diversify by adopting low-carbon pathways and catalyze climate actions on ground. On 19 March 2021, Global Carbon Council received full approval under Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) of United Nations' International Civil Aviation Organization (ICAO). Global Carbon Council is a member of International Emissions Trading Association (IETA)
ELIGIBITY CRITERIA- A1 Type- New futuristic Projects shall start operation after submission of complete GCC registration request. A3 Type - Initial submission of project to the GCC Program shall take place either prior to the start of operation or within one year from the date of start of project operation.