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It is also important that each carbon credit (offset) proves a concept called additionality. The concept of additionality relates to the question of whether the project would have taken place in the absence of an intervention in the form of a price signal for emission credits. Only projects with emission levels below their original level, defined as emissions in a scenario without this price signal (along with all other constant factors), represent a net benefit to the environment. CO2 projects that, even in the absence of emission credits, generate high financial returns; or are constrained by regulation; or that are a common practice in an industry; are generally not considered additional. A complete determination of additionality requires a careful review of proposed CO2 offset projects. [22] We must take into account the effects of producing alternative energy sources. For example, hydrocarbons emitted during the production and transportation of a large wind turbine would prohibit the issuance of a credit for a predetermined period. By treating issues as market products, some advocates insist that it is easier for companies to understand and manage their business, while economists and traders can try to predict future prices using market theories. The main advantages of a tradable issue over a carbon tax are invoked: there are credit trading exchanges, including the European Climate Exchange, the NASDAQ OMX Commodities Europe Exchange and the European Energy Exchange.

There are two types of credits: voluntary emission reduction (VER): a offsetting of CO2 emissions that is exchanged for credits on the over-the-counter market or on the voluntary market. Certified Emission Reduction (CER): Emission units (or credits) created by a regulatory framework to offset project emissions. [6] The objective is to enable market mechanisms to accelerate industrial and commercial processes towards low-emission or low-carbon approaches than those used in the absence of carbon dioxide and other greenhouse gas emission costs in the atmosphere. Because GHG reduction projects generate credits, this approach can be used to fund CO2 emission reduction programs between trading partners and the world. For newcomers, it is often difficult to find the right company to buy or sell emission credits and then decide on their price. It is also important to be aware of the types of credit available in the market and how they are compared. In return, these countries set emission quotas for facilities operated by local companies and other organizations commonly referred to as “operators.” Countries manage it through their national registries, which must be validated by the UNFCCC and subject to compliance checks. [12] Each operator has a credit premium in which each unit grants the owner the right to emit one tonne of carbon dioxide or other equivalent greenhouse gas.