The ABC's of Carbon Credits

Stepping into the voluntary carbon market can feel like learning a new language. But understanding these key terms can help you make sense of how the market really works. Whether you’re curious about how companies offset emissions or trying to figure out what all those acronyms actually mean, getting familiar with the basics is the first step. After working at Rebellion Energy Solutions and navigating the space firsthand, I’ve broken down the ABCs of Carbon Credits to help make this complex world a little clearer.

A – Additionality: 

A characteristic of a project that needs to be demonstrated in order to be eligible to participate in the voluntary carbon market. A project is additional if it’s activities are the cause of emission reductions/removals that would not have occurred otherwise, and would not have taken place without incentives produced by the voluntary carbon market.

B – Buffer Pool: 

In the voluntary carbon market (VCM), a buffer pool is a mechanism where a portion of carbon credits from a project is set aside and not sold, to cover potential reversals or losses of carbon stocks. These buffer credits act as an insurance policy, ensuring that if a project’s carbon sequestration is lost, there are credits available to compensate for the lost carbon. 

B – Baseline Measurement: 

A baseline measurement is a starting point or initial data point used for comparison. It’s the “before” measurement against which later data or changes are assessed to determine the extent of any impact or progress. Think of it as the reference point for evaluating the effectiveness of an intervention or a project. 

(Co)- Benefits: 

Additional environmental, social, or other benefits arising from a carbon project that are quantified based on metrics or indicators defined by the project developer, a co-benefits certification program, or third-party carbon project standard that accounts for both climate and co-benefits. Some registries and standards enable co-benefits certification to be “tagged” onto issued carbon offsets if quantification and verification of co-benefits are not already embedded in a carbon project standard. 

C – Carbon Credit: 

One Metric Tonne of C02 that is either removed or reduced from a bussiness as usual scenario. A carbon credit is a frequently used measurement unit to quantify carbon. Typically, one carbon credit is equal to one metric ton of carbon or carbon dioxide equivalent that is sequestered.

D – Data Room: 

A “data room” in the context of the voluntary carbon market (VCM) refers to a centralized platform where prospective buyers of carbon credits can access all necessary due diligence information about a project or auction. This platform aims to streamline the process of evaluating and purchasing carbon credits by providing a single source of truth for buyers. 

E – E&C: 

Errata and Clarifications are both types of corrections or additions to published works, but they serve different purposes. Errata are specific corrections of errors, typically production errors or errors introduced after the final draft, such as typos or omissions. Clarifications, on the other hand, provide additional information to make something clearer or easier to understand, without necessarily correcting an error. 

F – Fugitive emissions: 

Fugitive Emissions refer to unintentional releases of gases during extraction, processing, and transportation of oil and gas. 

G – Greenhouse Gas (GHG) Emission: 

Gases that trap heat in the atmosphere. Carbon dioxide, methane, nitrous oxide, and fluorinated gases are the primary greenhouse gases.

H – Hi Flow 2: 

High Flow 2 methane measurement system allows for accurate quantification of fugitive methane emissions from orphan wells. 

I – (ICVCM) Integrity Council for the Voluntary Carbon Market: 

The Integrity Council for the Voluntary Carbon Market is a non-profit, independent governance body that aims to set and maintain a global standard for high integrity in the voluntary carbon market, unlocking private climate and carbon finance that would not otherwise be deployed.

J – Jobs: 

Through our work we are creating high quality jobs in both the environmental sustainability sector and oilfield workers. 

K – Kilogram: 

An orphan well may leak millions of kgCO2e over a 20 year period.

L- Leakage: 

When a reduction in emissions from a carbon offset project in one location produces a rise in emissions in another area. 

M – Monitoring, Reporting, and Verification (MRV): 

Monitoring, Reporting, and Verification is a critical process that ensures the accuracy and credibility of carbon credits. It involves systematically measuring and documenting project activities, reporting the data to relevant parties, and having an independent third party verify the reported data. This process is crucial for building trust in the market and ensuring that carbon reductions are real, verifiable, and permanent. 

M – Mandatory (Compliance) Market: 

Mandatory (compliance) markets are governed by national, regional, or provincial law and compel emission sources to meet GHG emission reduction targets. Because compliance program offset credits are generated and traded for regulatory compliance, they typically act like other commodity pricing.

N – Net Zero: 

A condition in which greenhouse gases emitted into the atmosphere are balanced by the amount of greenhouse gases being removed from the atmosphere. 

O – Offsets: 

Carbon offsets are a mechanism where individuals or organizations compensate for their carbon dioxide emissions by investing in projects that reduce or remove equivalent amounts of carbon from the atmosphere. 

O – Orphan Well: 

Orphan wells are  abandoned oil and gas wells that have no responsible operator or owner. These wells, often unplugged, can pose significant environmental and safety risks due to the potential for leaks and emissions of hazardous materials like methane. The burden of plugging and remediating orphan wells typically falls on government agencies or other entities due to the lack of a financially responsible party. 

P – Permanence: 

Permanence is a key tenet of carbon offset programs. In order for greenhouse gas (GHG) emission reductions or removals to earn offset credits and have value in the carbon markets, the GHGs must be permanently reduced or sequestered. Permanence is defined as providing lasting benefits to the environment.

Q – Quality: 

Characteristics of offsets relating to environmental integrity such as permanent, real and additional. (Read more about the Core Carbon Principles here)

R – Retire: 

To permanently remove carbon offsets from the market in order to prevent them from being resold after they’ve been used up. Offsets are typically decommissioned by assigning them unique serial numbers and registering them in an official registry.

R – Registry: 

A body that issues, holds, and transfers carbon offsets, which are given unique serial numbers to track them throughout their lifetime. Registries can also retire offsets. In compliance markets, each market has its own designated registry. In the voluntary market, independent registries exist. (Read more about one of the registries here: ACR) 

S – SDGs: 

The UN Sustainable Development Goals (US SDGs) consist of 17 interconnected objectives intended to serve as a “shared blueprint for peace and prosperity for people and the planet, both now and in the future.” Established by the United Nations General Assembly in 2015. These goals were designed to be achieved by the year 2030.

T – Transparency: 

Transparency is crucial for building trust and integrity within the Voluntary Carbon Market (VCM). By enhancing transparency, the market can better attract investors, encourage participation, and ensure the environmental impact of carbon credits is accurately reflected. This includes making information readily accessible about project data, credit issuance, and how carbon credits are used. 

U – Uncertainty: 

Uncertainty in carbon credit over-crediting arises from various factors, including the complexity of measuring and verifying emissions reductions, the use of different methodologies by various standard organizations, and the lack of clear guidance on how buyers should use credits to achieve their decarbonization goals. 

V – Voluntary Carbon Market: 

The carbon market we refer to here is the Voluntary Carbon Market (VCM) which is a market-based system in which companies, individuals and organizations can voluntarily purchase carbon offsets issued by a carbon project, such as an improved agricultural land management project. The purchase of carbon offsets in the VCM is driven by corporate social responsibility, to acheive certain sustainability goals, a desire to mitigate environmental impact and to demonstrate climate leadership.

V – Verification: 

The process of confirming carbon reduction or sequestration generated through project implementation through a third party auditor.

V – Validation and or Verification Body: 

Is a body that ensures rules and requirements of an individual methodology, third party standard and local and jurisdictional laws are being adhered to at time of project registration and verification event.  

V – Vintage: 

The year of emissions reduction that a carbon credit belongs to. The vintage of an offset may not necessarily match the year of the transaction, and the vintage year may even be in the future.

W – Wellhead: 

Orphan wells only protection between emissions is the wellhead. However once abandoned with no maintenance these wellhead corrode very quickly and begin showing fugitive methane emissions That increase over length of time as wellhead corrosion occurs. 

X – Xeriscaping: 

Our post plugging land restoration utilizes a design with natural ecosystems in mind , making it an essential strategy in climate-adapted and regenerative land use.

Y – Yield: 

Our methane abatement credits yield 28 times more CO2 emission reductions due to methane being such a potent greenhouse gas.

Z – Zero emissions: 

Rebellion Energy Solutions has confirmed zero emissions with our post monitoring of 20 years.