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Carbon offsets are great for business and climate, if we solve these problems

Carbon projects aim to prevent global warming by reducing the amount of greenhouse gases, mainly CO2, in the atmosphere. But these projects come with risks and challenges that must be overcome to effectively address climate change.
Carbon offsets are great for business and climate, if we solve these problems
Carbon offsets are great for business and climate, if we solve these problems
Small businesses should also be part of sustainable development
Small businesses should also be part of sustainable development
The global carbon credit market will grow more than 15-fold by 2030
The global carbon credit market will grow more than 15-fold by 2030
Technology will create a transparent framework for carbon offsets
Technology will create a transparent framework for carbon offsets
The carbon credit market
Carbon projects reduce atmospheric CO2 and create carbon credits that can be bought and sold. Carbon credits, or tons of CO2 equivalent, are measures of the ability of a greenhouse gas to affect global warming. Many countries have limits on greenhouse gas emissions, and companies must pay to exceed these limits by buying carbon credits.

A company can voluntarily set a target to reduce emissions. The company can do this by transition to zero carbon practices, confirming the changes with a certificate from a recognized organization in the marketplace, and receiving carbon credits for its emissions reductions. Alternatively, it can buy carbon credits and thus invest in the reduction of overall emissions on the planet.

For businesses, carbon credit revenues are one of the great benefits of participating in a carbon project. In theory, a company can sell its carbon credits to other companies, but so far, it's been difficult for smaller players to gain a foothold in the carbon market. In addition to carbon credit revenues, companies receive other benefits from carbon projects: for example, lower taxes and access to ESG investments.
Financial benefits of ESG
Reducing carbon footprints became extremely beneficial for export companies after the European Union announced the introduction of a "carbon tax" on products imported from abroad. Companies importing cement, electricity, fertilizer, aluminum, iron, and steel into the EU will have to report their emissions from 2023 and buy special certificates from 2026 to offset their carbon footprints.

In today's global economy, almost every company depends on international supply chains, and a company’s carbon footprint includes the entire production chain. Thus, carbon projects are crucial to gaining a foothold in the international market.

A company can have internal corporate sustainability goals, and carbon projects help achieve them. Improved ESG performance opens the door to sustainable investment.
Two types of carbon projects
There are generally two types of carbon projects: natural and technological. Natural projects aim to protect, restore, and manage natural ecosystems efficiently. Technological projects are carried out in various industry and transportation sectors.

Natural solutions are based on the fact that plants absorb carbon dioxide from the air and store it in their fibers. To receive carbon credits, a natural solution must demonstrate that its implementation will increase global carbon dioxide uptake. There are several ways to calculate this uptake and international organizations such as Verra, Gold Standard, GCC, and others to validate them.

Technological сarbon projects mainly include everything related to CCS / CCUS technology (carbon capture and storage/carbon dioxide capture, utilization, and storage), enhanced oil recovery, fossil fuel utilization with CCS, and bioenergy with CCS.
Small businesses should also be part of sustainable development
Small businesses should also be part of sustainable development
The global carbon credit market will grow more than 15-fold by 2030
The global carbon credit market will grow more than 15-fold by 2030
Technology will create a transparent framework for carbon offsets
Technology will create a transparent framework for carbon offsets
What's the challenge?
More carbon projects might exist if not for a number of obstacles.

The regulatory and methodological framework, especially for forest projects, is poorly developed. Yes, there are international organizations, but their services are expensive. It's difficult for small and medium enterprises to participate in climate projects and the carbon market because the entry threshold is too high. More standardization and the inclusion of government support for small businesses are needed here.

Lack of experience and knowledge. Business leaders don't know the key steps the company needs to take and are unfamiliar with the key participants and counterparties involved in the process.

The need for more transparency. The current certification system inspires little confidence and seems like a mere formality that does nothing to combat climate change, as research shows. A unified accounting method, information security via blockchain, and improved accessibility to ESG services are needed to bring about real change.

FCE Group and TransparenTerra are working to bring together a group of key partners on a technology-enabled platform to provide small businesses and small projects with access to the carbon market.

Recent partnerships have included BioCarbonRegistry, a carbon certification company; CTX, a carbon credit exchange; and S&P Scores, whose methodology will be used to calculate carbon footprints directly on the TransparenTerra platform.

The prospects for carbon projects are enormous. McKinsey & Company forecasts that the global carbon credit market will increase more than 15-fold by 2030 and 100-fold to $200 billion by 2050. However, the carbon credit market must stop being elitist and opaque and actually help improve the climate situation. To become a key element of the global market, all market participants must be involved to achieve real change.
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