How Voluntary Credits Work

• Emission Reduction Projects: Voluntary credits are generated from projects that reduce or remove GHG emissions, such as renewable energy development, forest conservation, reforestation, methane reduction, and energy efficiency improvements. The amount of GHG reduced by these projects is certified and issued as credits.
• Credit Purchase: Companies or individuals buy these credits to offset their own emissions. For example, companies may achieve “carbon neutrality” by offsetting their emissions through voluntary credits and can advertise their products or services as “carbon offset.”
• Offsetting Emissions: The purchased voluntary credits correspond to the offsetting of an equivalent amount of CO2 emissions. This enables businesses and individuals to demonstrate their contribution to combating climate change and fulfilling their social responsibility.

Uses of Voluntary Credits

• Corporate Carbon Neutrality: Many companies use voluntary credits to offset emissions and declare themselves “carbon neutral.” Large companies often purchase credits as part of broader efforts to reduce emissions across their supply chains.
• Carbon Offset for Products and Services: Some companies purchase credits to offset emissions related to specific products or services (e.g., flights, events, electricity) and promote this to consumers.
• Individual Contributions: Consumers or organizations can also buy credits to offset emissions from their activities, such as travel, helping them adopt a more sustainable lifestyle.

Certification of Voluntary Credits

To ensure the reliability of voluntary credits, several certification bodies and standards oversee their issuance. Some of the main certification programs include:

• Verra (VCS: Verified Carbon Standard): The largest voluntary credit certification program, covering a variety of emission reduction projects.
• NbS (Nature-based Solutions): A voluntary credit certification program in Japan that promotes green carbon projects and supports ESG initiatives.
• Gold Standard: Credits issued for projects that provide not only environmental benefits but also contribute to social welfare and the Sustainable Development Goals (SDGs).
• Plan Vivo: A certification body focusing on forest conservation and land management projects, particularly emphasizing community-based sustainable development.

Growth of the Voluntary Credit Market

The voluntary credit market is expanding rapidly, driven by rising corporate commitments to carbon neutrality and increasing consumer awareness of climate change. The growth is fueled by:

• Corporate Sustainability Strategies: Companies view voluntary credits as a key tool for fulfilling their responsibility to reduce emissions.
• Flexibility Beyond Regulation: The voluntary market allows businesses and individuals to contribute to environmental goals without being bound by regulations, offering greater flexibility for proactive climate action.
• Rising Public Concern about Climate Change: As consumers and investors demand greater environmental responsibility from companies, voluntary credits have become an important part of corporate climate strategies.

Challenges of Voluntary Credits

While voluntary credits offer many benefits, there are also challenges:

• Credit Quality and Transparency: Some projects may not deliver long-term or significant GHG reductions. Ensuring quality and transparency requires rigorous auditing and reporting.
• Double Counting Risk: There is a risk that the same reduction could be counted in multiple credits, inflating the reported impact. Reliable tracking systems are essential to prevent this.

Conclusion

Voluntary credits are a flexible and important tool for companies and individuals aiming to reduce their carbon footprint and achieve carbon neutrality. As a growing market, voluntary credits complement regulatory efforts and accelerate climate change mitigation. However, transparency, high-quality credit management, and genuine emission reduction efforts are crucial to ensuring their effectiveness.