A greenhouse gas emission reduction credit is the result of a specific and identifiable action taken to reduce greenhouse gas (GHG) emissions. This reduction must be quantifiable by acceptable, transparent, and replicable calculation methodology. It is important to note that each emission reduction activity/project is unique, and that the quality of the reduction depends on the level of documentation and analysis provided.
Greenhouse gas reductions are usually expressed in tons of carbon dioxide equivalent. Six types of greenhouse gas are internationally recognized: carbon dioxide, methane, nitrous oxide, perfluoro-carbons, hydrofluorocarbons, and sulphur hexafluoride.
Typical reductions are created by burning less fossil fuel. This can be done through the displacement of fossil fuels by lower-emitting or non-emitting sources of energy such as renewable energy. Reductions can be created by energy-efficient upgrades of equipment or by employing new technologies to reduce emissions.
The recovery and/or flaring of methane from various agricultural and landfill sources is another example of an emission-reducing activity. Methane that would otherwise be … is either captured for use as fuel or flared to reduce the amount of gas released into the atmosphere.
Other important activities for mitigating GHG emissions are forest projects which enhance absorption of emissions by trees and other vegetation. Improving forest management can reduce emissions by a significant amount. This is done by controlling deforestation, preserving old-growth forests and by planting trees on unused or marginal farmland. Emission reduction credits can be traded between parties. Due to the global nature of the greenhouse effect, a ton of CO2 reduced in California has the same effect on the environment as a reduction of CO2 emissions would have in Japan. These credits may be retired (taken off the market), thereby ensuring that no potential emitter could ever use them to offset their emissions.
Emissions trading provides the most cost effective and flexible approach to reducing greenhouse gases on a global scale. The development of GHG trading is a cornerstone of both domestic and international climate policy. Emissions trading promotes economic efficiency because emitters have the choice of making the reductions themselves or purchasing credits from someone with a lower abatement cost.
Emission Reduction Trading