CFP Energy is an award-winning carbon trading company with over 20 years of experience, working with organisations around the world to decarbonise operations and support sustainability.
This guide will cover carbon credits and their uses. But if you are ready to trade now, contact our team for instant market access. For ETS support, contact us. Or, to purchase voluntary carbon credits, contact our separate dedicated team here.
Exploring the Landscape: What Are Carbon Credits?
Carbon credits, originally developed as part of the Kyoto Protocol, are a financial mechanism that allows businesses to offset their carbon emissions that might prove difficult to eliminate directly. One carbon credit represents one metric tonne of CO₂ (or equivalent) that's been reduced, removed, or avoided. Once registered, these credits can be traded on dedicated marketplaces that track attributes like ownership, project type and retirement status.
The Carbon Balancing Act: Carbon Credits Explained
In practice, carbon credits operate under a ‘cap and trade’ system. Each industry, from aviation and manufacturing to logistics and data centre operations, has its carbon emission allowance.
Beyond this allowance (the ‘cap’), businesses may offset their emissions by buying carbon credits through the Emissions Trading System (ETS).
Representing a permit to go over their allowance by one tonne of CO₂, these credits provide a crucial failsafe for companies striving to meet their carbon emissions targets.
It's important, however, to understand the difference between the European Trading System (ETS) and the Voluntary Carbon Market (VCM) - both markets facilitate the buying and selling of carbon credits. But where the ETS covers carbon credits that businesses purchase to meet compliance regulations, VCMs allow companies to purchase carbon credits voluntarily.
To explore the difference in more detail, see: Voluntary Carbon Markets Explained.
Who Issues Carbon Credits?
Carbon credits are typically issued through a collaborative process involving project developers and verification bodies, each playing distinct but complementary roles.
Project developers are the organisations that create, implement, and manage carbon emission reduction or removal projects. At CFP Energy, we can help you identify opportunities and oversee the delivery of the project from ideation to execution.
Accreditation bodies, meanwhile, establish the standards and methodologies that projects must follow to supply legitimate carbon credits. Accreditors such as Verra Gold Standard, American Carbon Registry, and Climate Action Reserve provide the necessary protocols that ensure each project represents genuine emissions reductions.
These bodies verify that projects meet rigorous criteria, including additionality (proving the reductions wouldn't have otherwise occurred), permanence, and the absence of double-counting.
For businesses investing in voluntary carbon projects, accreditation bodies like these serve as crucial quality indicators, helping to mitigate risk and ensure environmental integrity.
Investing in a Greener Tomorrow: Finca Amakella Forest Restoration
Since 2023, CFP Energy has been developing a project in Salta Province, Argentina.
Located on a privately owned estate, the project has set about regenerating 7,500 hectares of native forest degraded by extensive cattle grazing and unsustainable logging.
To return the area to a thriving habitat, the project employs sensitive regeneration using native plant species and sustainable land management practices.
To date, the progress of the project has already exceeded initial expectations.
Current forecasts indicate that carbon credit volumes produced by the project will triple by 2026, reaching over 40,000 carbon credits by 2027, a market asset that translates as 40,000 metric tonnes of CO₂ removed from the atmosphere.
At CFP Energy, we are delighted to be at the forefront of a project that combines habitat restoration with economic growth, leading the way in climate-positive development.
How Can You Use Carbon Credits? Carbon Credits Explained
From voluntary offsetting to compliance, companies can use carbon credits to ensure compliance in the cap and trade system (ETS) or to meet their broader environmental goals. But how carbon credits are sourced and implemented will vary from sector to sector.
In aviation, for instance, carbon credits are purchased to offset flight emissions through schemes like CORSIA. Shipping companies, meanwhile, operate within the International Maritime Organisation's (IMO), which sets mandatory GHG emissions caps, while data centres employ Renewable Energy Certificates (RECs), combined with targeted carbon credits, to achieve their regulatory commitments and reduce Scope 2 emissions.
The VCM provides a mechanism to drive private finance into the protection of nature and into carbon removal from the atmosphere, local communities are supported and biodiversity is protected, all while organisations are supported with their decarbonisation strategy.
Beyond the Hype: Ensuring the Legitimacy of Carbon Credits
Securing the legitimacy of carbon credits is essential, particularly in an era where companies frequently come under fire for failing to properly audit their carbon reductions.
To ensure that the carbon credits you buy are credible, follow the steps below:
Key Aspects of a Verified Project:
- Validation: This initial assessment ensures that the project design meets the required standards and methodologies for carbon reduction or removal.
- Verification: This ongoing process involves periodic reviews to confirm that the project is achieving the claimed emission reductions or removals.
- Certification: Once verified, the project is certified and issued carbon credits, such as Verified Carbon Units (VCUs) under the Verified Carbon Standard (VCS) programme.
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From Offsets to Impact: How Carbon Credits Support Sustainable Development
Beyond CO₂ offsetting, carbon credits offer a range of related ecological benefits.
Such benefits, usually called ‘co-benefits’, can be defined as the indirect positive impacts that arise from carbon credit projects. In many ways, such collateral gains are starting to become integral. A recent survey by the Forest Foundation, for instance, found that 29% of respondents evaluated projects based on their co-benefits, showing that businesses are starting to think more systematically about their impact.
In practice, such benefits might include:
Habitat Restoration
Where carbon credits support the financing of habitat restoration, one such co-benefit is biodiversity. Forests are also ecosystems, and afforestation/reforestation projects, alongside carbon offsetting, will help provide endangered species with a viable habitat.
Climate Resilience
Similarly, for carbon credit projects that support ecosystems, such projects may also indirectly support the buffering of climate extremes. For instance, reforestation, in addition to increasing carbon capture, may also help prevent flooding and lower ambient temperatures during heat waves through increased forest canopy coverage.
Health Benefits
Within carbon credit schemes that support cookstove initiatives (i.e., the funding of energy-efficient stoves in developing countries), there are additional health benefits. The use of modern cookstoves helps reduce indoor air pollution, thereby decreasing respiratory diseases and eye problems among members of the household.
Taking Action on Climate Change: CFP’s Commitment to Carbon Neutrality
CFP Energy supports sustainability throughout every aspect of its business.
We supply carbon credits as Renewable Energy Certificates (RECs), as well as Voluntary Carbon Credits that support schemes like CORSIA and IMO.
Our commitment to carbon neutrality and Net Zero ensures our determination to help our clients decarbonise as effectively as possible, whether through our extensive risk management and market insights service, or through our supply of high-quality carbon credits.
Investing in a Sustainable Future: How We Can Help You Offset Your Carbon Footprint
At CFP Energy, with 20+ years in the energy industry, our expertise matches our extensive market experience. Our tailored services include comprehensive carbon management solutions, ensuring the effective reduction or removal of carbon from the atmosphere.
Whether exploring your voluntary carbon options or seeking expert advice on carbon compliance, contact our team to discuss your carbon strategy today.
