+
Carbon Credits Trading Process
POWER & RENEWABLE ENERGY

Carbon Credits Trading Process

Carbon credits trading is an essential market mechanism that facilitates the reduction of greenhouse gas emissions. It allows companies to buy or sell carbon credits to compensate for their carbon footprint. Here, we discuss the procedure involved in carbon credits trading.

The first step in the carbon credits trading process is for the company wanting to reduce its carbon emissions to develop a project that results in a certified emission reduction. This project could be anything from renewable energy installations to energy efficiency measures. The project needs to meet specific criteria and adhere to recognized standards.

Once the project is operational, it needs to undergo a rigorous verification process to ensure that it meets the stated emission reduction goals. Verification takes into consideration factors such as baseline emissions, additionality, and quantification of emissions. This is done by an independent third-party auditor who checks the project's compliance with approved methodologies.

Once the project is verified, it can generate carbon credits, also known as Certified Emission Reductions (CERs), which can be traded on the carbon market. Each CER represents one metric ton of carbon dioxide equivalent (CO2e) that has been reduced or removed from the atmosphere. These CERs are registered and issued in a central registry, making them traceable and transparent.

Now comes the trading phase, where companies can buy or sell CERs to either compensate for their own emissions or as an investment opportunity. The carbon market allows for bilateral transactions as well as trading on exchanges. Buyers seek to purchase CERs to meet their carbon reduction targets, while sellers monetize their emission reductions.

The carbon credits are transferred through a transfer of ownership process, where both parties agree to the terms of the transaction. Once the transfer is complete, the buyer can use the purchased CERs to offset their own emissions. This offsets their carbon footprint effectively, as the emissions reduced elsewhere compensate for their emissions.

It's worth noting that the value of carbon credits varies based on factors such as market demand, project quality, and regulatory frameworks. The pricing of carbon credits is influenced by market forces, and companies need to stay updated on market trends to make informed trading decisions.

In conclusion, carbon credits trading offers an opportunity for companies to take responsibility for their carbon emissions and actively contribute to the reduction of greenhouse gases. Through a structured procedure involving project development, verification, and trading, carbon credits enable companies to invest in emission reductions and progress towards a more sustainable future.

Carbon credits trading is an essential market mechanism that facilitates the reduction of greenhouse gas emissions. It allows companies to buy or sell carbon credits to compensate for their carbon footprint. Here, we discuss the procedure involved in carbon credits trading. The first step in the carbon credits trading process is for the company wanting to reduce its carbon emissions to develop a project that results in a certified emission reduction. This project could be anything from renewable energy installations to energy efficiency measures. The project needs to meet specific criteria and adhere to recognized standards. Once the project is operational, it needs to undergo a rigorous verification process to ensure that it meets the stated emission reduction goals. Verification takes into consideration factors such as baseline emissions, additionality, and quantification of emissions. This is done by an independent third-party auditor who checks the project's compliance with approved methodologies. Once the project is verified, it can generate carbon credits, also known as Certified Emission Reductions (CERs), which can be traded on the carbon market. Each CER represents one metric ton of carbon dioxide equivalent (CO2e) that has been reduced or removed from the atmosphere. These CERs are registered and issued in a central registry, making them traceable and transparent. Now comes the trading phase, where companies can buy or sell CERs to either compensate for their own emissions or as an investment opportunity. The carbon market allows for bilateral transactions as well as trading on exchanges. Buyers seek to purchase CERs to meet their carbon reduction targets, while sellers monetize their emission reductions. The carbon credits are transferred through a transfer of ownership process, where both parties agree to the terms of the transaction. Once the transfer is complete, the buyer can use the purchased CERs to offset their own emissions. This offsets their carbon footprint effectively, as the emissions reduced elsewhere compensate for their emissions. It's worth noting that the value of carbon credits varies based on factors such as market demand, project quality, and regulatory frameworks. The pricing of carbon credits is influenced by market forces, and companies need to stay updated on market trends to make informed trading decisions. In conclusion, carbon credits trading offers an opportunity for companies to take responsibility for their carbon emissions and actively contribute to the reduction of greenhouse gases. Through a structured procedure involving project development, verification, and trading, carbon credits enable companies to invest in emission reductions and progress towards a more sustainable future.

Next Story
Infrastructure Energy

Reliable Energy Storage Vital for 24/7 Renewable Power: TKIL

Reliable, scalable, and efficient energy storage systems are essential to ensuring uninterrupted renewable energy supply, said engineering firm TKIL Industries at the India Energy Storage Week (IESW) 2025.India aims to achieve 500 GW of renewable energy capacity within the next five years.Speaking at IESW, organised by the India Energy Storage Alliance (IESA), Vivek Bhatia, Managing Director and CEO of TKIL Industries, emphasised that the country’s energy sector is experiencing a major transformation. This shift is being driven by innovations in storage technology, aimed at improving grid re..

Next Story
Infrastructure Energy

IIT Madras, Hyundai Launch £17m Hydrogen Research Centre

The Indian Institute of Technology Madras (IIT Madras) and Hyundai Motor India Ltd (HMIL) have announced the establishment of the Hyundai HTWO Innovation Centre, a cutting-edge hydrogen research facility set to begin operations by 2026.The Rs 180 crore (approx. £17 million or USD 21.5 million) project will be located at IIT Madras' Discovery Campus in Thaiyur, near Chennai. Of the total, Rs 100 crore (approx. £9.4 million) has been committed by HMIL and its philanthropic arm, Hyundai Motor India Foundation (HMIF), with support from the Government of Tamil Nadu and its investment promotion ag..

Next Story
Infrastructure Energy

India’s Hydrogen Demand to Hit 8.8 MTPA by 2032: IESA Report

India’s hydrogen demand is projected to grow at a compound annual growth rate (CAGR) of 3 per cent, reaching 8.8 million tonnes per annum (MTPA) by 2032, according to a report released by the India Energy Storage Alliance (IESA).Unveiled on the first day of the India Energy Storage Week (IESW) 2025, the report points out a gap between ambitious project announcements and actual progress. While green hydrogen (GH₂) projects totalling 9.2 MTPA have been announced, only a limited number have reached Final Investment Decision (FID) or secured long-term domestic or international offtake agreemen..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?