Forest carbon credit considered as a non visible forest product” that can be a viable alternative source of income for forest landowners. It’s a metric ton of carbon dioxide equivalent (CO2e), of whichthe emission is newly sequestered and is purchased by GHG emitters as a cost-control measure to make up for emissions occurring elsewhere.
Managing forests for carbon emission offsetting gives the world the opportunity to reverse or at least sequestered the emissions that they have already made or they are about to make into the atmosphere. The total GHG emissions are increasing rapidly. Most of the GHG emissions of all time have been done in the last 40 years of our existence. More GHG emission mean climatic shifts which leads to intensive droughts somewhere and acute floods in other areas of the world. Because of those blindly done deforestation which hampers the smooth functioning of the forest and gets in the middle of the process of habitats having their share of biodiversity.
Researches around the world point to a fact that forests can play a vital role in mitigating the inimical effects of climate change and can help in putting a shackle on this ever-increasing global warming. Quality and Quantity of herbs, restoring the disbalances caused by humans in nature, water as a resource in quantity & quality, providing wildlife a habitat to call home and protecting biodiversity in that habitat.
Forest & Carbon Offset
To get an understanding of the carbon offset markets, we need to know how CO2 is measured and traded for various purposes. CO2 being the major contributor as the GHGs in the atmosphere, promoting global warming. All other gases are not actually come that much into consideration because CO2 is more easily measurable that others. The carbon unit in which it is measured is “metric tons of CO2 Equivalent” often seen written as MtCO2e or tCO2e & also called as “Carbon Credit or Carbon offset”.
Currently sellers of carbon offsets are majorly forest landowners who are looking to opening up different forest-based revenue streams by helping out the GHG emitters in exchange of a handsome payday.
There are two distinct types of carbon markets; voluntary and compliance markets.
Carbon markets are divided into two subdivisions – voluntary &compliance markets.
Voluntary markets exist where companies or individuals buy carbon credits for purely a voluntary basis. Many companies voluntarily purchase carbon credits to demonstrate their commitment to protecting the environment and to demonstrate corporate social responsibility.
Voluntary markets are there for the individuals and companies so that they buy the credits for the sole purpose of showcasing their concern towards the environment, its well-being and their willingness to go above and beyond to correct it. It fulfils their commitment to live up to the corporate social responsibility they owe to the society.
Prices for the carbon offset in voluntary market, globally, can fall anywhere between a wide range.Forest authorities & land usage projects are somewhat larger voluntary carbon project categories than any other kind. There are numerous factors that influence the price determination of carbon credits at the very point in time for e.g.,the type & location of project that is put up against asking for the credits, additional deemed project benefits that will play out to be an influencing factor, marketing efforts & many others.
The emission stays within limit as it is cancelled out by the very nature of the deal and there is no margin left to betray the environment in any case.
Compliance Carbon Market
Compliance carbon markets are such marketplaces through which “regulated by the cap & trade” entities obtain & surrender emissions allowances or better known as ‘offsets’ in order to meet predetermined regulatory targets.
In case of cap & trade programs; participants i.e., both emitters and intermediaries such as financial institutions; both are allowed to trade allowances to make profit from the unused allowances or for meeting regulatory requirements.