The United Nations’ Intergovernmental Panel on Climate Change (IPCC) developed a carbon credit proposal to reduce worldwide carbon emissions in a 1997 agreement known as the Kyoto Protocol. The agreement set binding emission reduction targets for the countries that signed it. Another agreement, known as the Marrakesh Accords, spelled out the rules for how the system would work.

The Kyoto Protocol divided countries into industrialized and developing economies. Industrialized countries, collectively called Annex 1, operated in their own emissions trading market. If a country emitted less than its target amount of hydrocarbons, it could sell its surplus credits to countries that did not achieve its Kyoto level goals, through an Emissions Reduction Purchase Agreement (ERPA).

The separate Clean Development Mechanism for developing countries issued carbon credits called a Certified Emission Reduction (CER). A developing nation could receive these credits for supporting sustainable development initiatives. The trading of CERs took place in a separate market.

The most direct way to purchase them is at the source: from the organization responsible for the project you want to support. In this case, your company can either invest in the development of the project with a promise of return in the form of future carbon credits, or buy what are called Emission Reduction Purchase Agreements (ERPAs), upfront payment for carbon credits to be delivered as and when they are generated. This latter option is more common when the project is already at a later stage of development.

A carbon market allows investors and corporations to trade both carbon credits and carbon offsets simultaneously. This mitigates the environmental crisis, while also creating new market opportunities. New challenges nearly always produce new markets, and the ongoing climate crisis and rising global emissions are no exception. whose motto is “climate action made simple”

The renewed interest in carbon markets is relatively new. International carbon trading markets have been around since the 1997 Kyoto Protocols, but the emergence of new regional markets has prompted a surge in investment.