We’re running the most dangerous experiment in history right now, which is to see how much carbon dioxide the atmosphere… can handle before there is an environmental catastrophe.
Last month we launched our Carbon Credit AI, and invited you to submit your questions. Now that this service has been running for a few weeks, it’s becoming increasingly evident that one of the questions you’re most curious about is who issues carbon credits and how, so we decided to write this blog post and give some insights. Hopefully you’ll find this insightful…
What is a Carbon Credit?
Climate change is one of the greatest challenges facing our planet today. The burning of fossil fuels and other human activities have led to an increase in greenhouse gas emissions, which in turn has caused global temperatures to rise. This has resulted in more frequent and severe weather events, rising sea levels, and other detrimental effects on the environment.
Carbon credits represent a unit of measurement for greenhouse gas emissions reductions or removals. Carbon credits enable entities to offset their own emissions by investing in ventures that reduce or remove greenhouse gasses from the atmosphere. This not only helps to reduce overall emissions but also promotes sustainable development and the transition to a low-carbon economy.
Carbon credits support climate change mitigation by providing a financial framework of incentives that governs how companies and organizations match their climate change commitments and reduce their emissions.
When a company or organization reduces its emissions below a certain threshold, it can earn carbon credits. These credits can then be sold or traded on carbon markets.
Understanding the Carbon Market
The carbon market is a system that enables the buying and selling of carbon credits. It operates on the principle of supply and demand, with some companies and organizations seeking to buy carbon credits to offset their emissions, while others seek to sell their excess credits. The carbon market can be divided into two main types:
- Compliance markets
- Voluntary markets.
Trading mechanisms in these carbon markets vary depending on the type of market and the specific rules and regulations in place:
Carbon Credit Compliance Markets
Compliance markets are established by governments and are mandatory for certain industries or sectors. These markets use carbon credits as a means of compliance to ensure that companies meet mandatory targets. Carbon credits in these markets are typically allocated or auctioned off by governments, and companies can buy or sell these credits on a secondary market.
Examples of compliance markets are:
- The European Union Emissions Trading System (EU ETS)
- The California Cap-and-Trade Program.
Carbon Credit Voluntary Markets
Voluntary markets are not regulated by governments and are driven by companies and individuals who voluntarily choose to offset their emissions. Carbon credits for these markets are often generated through projects that reduce or remove greenhouse gasses, and these credits can be bought directly from project developers or through specialized platforms. These markets provide an opportunity for companies to take responsibility for their carbon footprint and demonstrate their commitment to sustainability.
Examples of voluntary markets are:
- The Verified Carbon Standard (VCS).
- The Gold Standard.
How are Carbon Credits Issued?
Carbon credits can be issued for projects that can be proven to reduce carbon emissions or absorb carbon from the environment. These may include, but are not limited to:
- Renewable energy initiatives.
- Energy efficiency programs.
- Afforestation & reforestation projects.
- Waste management schemes.
These projects not only help to reduce emissions but also contribute to sustainable development and job creation. By issuing carbon credits for these projects, governments, international organizations and private enterprises can support their implementation and ensure they are financially viable. Let’s take a closer look at how each of the above projects are leveraged to create carbon credits:
Issuing Carbon Credits from Wind Farms
By generating clean, renewable energy, wind farms help to reduce the demand for fossil fuels and the associated greenhouse gas emissions. The emission reductions achieved by the wind farm can be quantified and converted into carbon credits, which can then be sold on the carbon market. Carbon Credit Capital offers such credits from our renewable energy partners in India.
Issuing Carbon Credits from Afforestation
These projects help to absorb carbon dioxide from the atmosphere and store it in biomass by planting trees. The amount of carbon dioxide absorbed by the trees can be quantified and converted into carbon credits. These credits can then be sold to companies or individuals looking to offset their emissions.
Carbon Credit Capital offers such credits from our forest conservation in Mongolia.
Issuing Carbon Credits from Waste Management
Waste management schemes create carbon credits by implementing methods to reduce carbon dioxide and methane emissions associated with waste, typically through activities such as food rescue, plastic recycling, and landfill gas management. Public and private waste management organizations can generate carbon credits that can be traded in carbon markets. This not only helps in environmental conservation but also provides economic benefits through the sale of these credits.
Carbon Offset Projects’ Auxiliary and Ancillary Benefits
Carbon offset projects provide multiple benefits beyond emission reductions. They often contribute to sustainable development, create jobs, and support local communities. For example, a renewable energy project can provide clean electricity to remote areas that previously relied on fossil fuels. A reforestation project can create employment opportunities for local communities and protect biodiversity.
By issuing carbon credits for these projects, the carbon market provides a financial incentive for their implementation. This helps to attract investment and support the growth of sustainable practices. Carbon offset projects also contribute to the transition to a low-carbon economy by promoting renewable energy, sustainable agriculture, and other climate-friendly activities.
How are Carbon Credits Certified?
The certification process is an essential step in issuing carbon credits and ensuring their credibility and integrity. Certification bodies are responsible for verifying that emission reduction projects meet specific criteria and standards before issuing carbon credits. This process involves a thorough assessment of the project’s methodology, monitoring systems, and emission reduction calculations.
The certification process begins with project developers submitting a project design document (PDD) to the certification body. The PDD outlines the project’s objectives, methodologies, and expected emission reductions. The certification body reviews the PDD and conducts an initial assessment to determine if the project meets the necessary requirements.
If the project is deemed eligible, it moves on to the validation stage. During validation, the certification body conducts an on-site visit to verify that the project is being implemented according to the approved methodology. This includes reviewing monitoring systems, data collection methods, and emission reduction calculations.
Once validation is complete, the certification body issues a validation report and registers the project with a unique identification number. The project can then begin generating carbon credits based on its verified emission reductions. These credits are typically issued in the form of tradable certificates, which can be bought and sold on the carbon market.
Examples of certification bodies include the aforementioned VCS and Gold Standard, as well as the Climate Action Reserve. These organizations have established rigorous standards and guidelines for carbon credit projects and provide independent verification and certification services. By certifying carbon credits, they ensure projects meet the necessary criteria and contribute to real emission reductions.
Carbon Credits Verification
Verification is another crucial step in issuing carbon credits and ensuring their credibility and integrity. Verification bodies such as Det Norske Veritas (DNV), SGS, and TÜV SÜD, have extensive experience in verifying emission reduction projects and ensuring compliance with international standards. By providing independent verification services, they help to build trust in the carbon market and ensure the integrity of carbon credits.
Carbon Credits Verification process
- Verification begins with project developers submitting a verification report including detailed information on the project’s emission reduction calculations, monitoring systems, and data collection methods to the verification body.
- The verification body then reviews the report and conducts an independent assessment to determine if the project meets the necessary requirements.
- Verification bodies may request additional information or conduct on-site visits to verify a project’s data’s accuracy. This includes reviewing monitoring equipment, data collection procedures, and emission reduction calculations. The verification body also checks for any potential errors or inconsistencies in the project’s documentation.
- Once the assessment is complete, the verification body issues a verification statement that confirms the accuracy of the project’s emission reduction calculations. This statement is then used by the certification body to issue carbon credits for the project. The verification body may also provide recommendations for improving monitoring systems or data collection methods to ensure ongoing compliance with standards.
Carbon Credits – Government’s Role
Governments play a crucial role in issuing carbon credits and driving emission reductions. They establish policies and regulations that set emission reduction targets for industries and sectors, and they oversee the allocation and trading of carbon credits. Government agencies are responsible for issuing and monitoring carbon credits, ensuring that they are valid and meet the necessary criteria.
Government policies on carbon credits vary from country to country, but they generally aim to incentivize emission reductions and promote sustainable practices. These policies can include cap-and-trade systems, carbon taxes, renewable energy incentives, and other measures that encourage companies to reduce their emissions. By issuing carbon credits, governments provide a tangible incentive for companies to invest in emission reduction projects.
Government agencies responsible for issuing carbon credits also vary depending on the country. In some cases, it may be a dedicated agency or department within the government that is responsible for overseeing the carbon market. In other cases, it may be a regulatory body or an environmental agency that is tasked with monitoring emissions and issuing carbon credits.
Carbon Credits – International Organizations’ Role
International organizations play a significant role in issuing carbon credits and reducing emissions on a global scale. These organizations work to establish standards and guidelines for carbon credit projects, provide technical assistance to project developers, and facilitate the trading of carbon credits.
One example of an international organization involved in carbon credits is the United Nations Framework Convention on Climate Change (UNFCCC), which oversees the Clean Development Mechanism (CDM), which allows developing countries to earn carbon credits by implementing emission reduction projects. The CDM has been instrumental in promoting sustainable development and technology transfer in developing countries.
Another example is the International Civil Aviation Organization’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which aims to offset the growth in international aviation emissions by requiring airlines to purchase carbon credits from approved projects. This initiative is expected to play a significant role in reducing emissions from the aviation sector.
Another important activity by international organizations is the funding and support for carbon credit projects. For example, the World Bank’s Forest Carbon Partnership Facility (FCPF) provides financial incentives for countries to reduce emissions from deforestation and forest degradation. By issuing carbon credits for these projects, international organizations can help to mobilize private sector investment and promote sustainable development.
Carbon Credits – Private Enterprises’ Role
As mentioned earlier, private entities and companies are key players in the carbon market, both as buyers and sellers of carbon credits.
Private Enterprise Carbon Credit Buyers
Many companies choose to meet compliance requirements, sustainability goals, or corporate social responsibility commitments by electing to offset their emissions through the purchase of carbon credits from projects that reduce or remove greenhouse gasses.
Private Enterprise Carbon Credit Sellers
There are also private companies that specialize in issuing carbon credits. The financial model on which these companies operate involves the development and implementation of emission reduction projects similar to the ones listed above through which they earn carbon credits for the attributable emissions reductions. These credits are then sold at a profit on carbon markets.
Examples of private companies issuing carbon credits may include:
- Renewable energy developers.
- Waste management companies.
- Forestry organizations.
Not only do these companies prove the financial incentive for others to make similar investments, and contribute to the transition to a low-carbon economy, but they also play a crucial role in promoting sustainable practices and educating for emission reductions.
Private Enterprises’ Role in Education
An important aspect of private companies’ involvement with carbon credits is the promotion of carbon credit projects through marketing and communication efforts – Often companies choose to highlight their carbon offset initiatives for branding purposes, as part of their sustainability strategies, or their corporate social responsibility efforts. These activities help raise awareness and encourage others to follow suit. By showcasing the benefits of carbon credits, private companies can inspire others to join the fight against climate change.
Conclusion
Carbon credits are a crucial tool in mitigating climate change and promoting sustainable development. They provide a financial incentive for companies and organizations to reduce their emissions and invest in emission reduction projects. Governments, international organizations, and private companies all play a role in the issuance, certification and validation of carbon credits and thereby driving emission reductions. Certification and verification processes ensure the credibility and integrity of carbon credits, while transparency promotes trust in the carbon market. The future of carbon credits holds great potential for achieving global climate goals and transitioning to a low-carbon economy.
If you’re interested in learning more about carbon credits and their impact on the environment, feel free to reach out to us – We’re always happy to help!
A few months ago I went to a climate change forum at the Center for Brooklyn History. The panel I attended, “Confronting Climate Change: Understanding Deniers,” featured the prominent climate activist, Bill McKibben.
Bill McKibben. Courtesy https://billmckibben.com/.
I was curious to hear McKibben’s take on climate change deniers. I don’t regard the true deniers as a big problem – they’re only 11-15% of our country, according to most polls. Rather, I wondered if McKibben would label as “climate deniers” people who agree that climate change is a significant problem but disagree with his framing and his proposed solutions. I have worked for decades on energy and climate matters as an energy lawyer. Now, more than ever, I believe that to address climate change we need to build a big tent.
In the Q&A I tested where McKibben is on this by asking if he would label as a climate denier someone who subscribes to the main tenets of climate change science yet holds that natural gas has a role to play as a bridge fuel. (Our exchange starts at 1:12:45 of the video.)
This could have been a chance for McKibben to make clear that such a view isn’t climate denialism, even if he feels it’s misguided. But he punted, saying “I don’t care whether they’re deniers or not.” For good measure, he threw in his long-standing refrain that swapping coal for natural gas makes climate change worse, despite coal’s far higher carbon content per unit of energy.
674-MW methane-powered generating station, Salem, MA.
As you can hear in the recording, McKibben’s claim that gas is worse than coal draws on the work of Cornell scientist Robert Howarth. Yet McKibben didn’t mention that Howarth’s work is controversial and disputed by many scientists. The crux of the dispute is whether methane’s impact on warming should be measured with a 20-year or 100-year time frame.
Methane is a relatively short-lived greenhouse gas, with a lifetime of around 10 years, versus the 100-year life applicable to carbon dioxide. But each ton of methane is far more potent while in the atmosphere, trapping roughly 100 times as much heat as a ton of CO2. These cross-cutting facts about atmospheric methane — shorter life but greater potency than CO2 — have resulted in two opposing camps: one insisting on a 20-year timeframe for greenhouse gas accounting, the other adhering to the established 100-year frame. This matters because with a 20-year timeframe, generating electricity with natural gas (which, chemically speaking, is essentially all methane) is more damaging to climate than coal-fired electricity.
McKibben blew past this dispute. To hear him at the Center for Brooklyn History, one would have no inkling that there’s an active disagreement over which timeframe to use, that there are staunch climate activists who favor the 100-year time frame, and that the Intergovernmental Panel on Climate Change (IPCC) generally uses the 100-year timeframe.
McKibben’s latest (2025) book. Published by W.W. Norton & Company.
McKibben also insisted that a discussion about natural gas’s potential role in mitigating climate change as a replacement for coal is irrelevant because solar “is now our cheapest resource.” McKibben’s claim, of course, suffuses “Here Comes the Sun,” his 2025 book that extols solar power as the cheapest solution for all of our energy needs. But this too is questionable, because it’s based on cost comparisons between solar farms and natural gas power plants (or nuclear power plants) that fail to consider that electricity supply and delivery is a complex system of wires and plants rather than individual power plants. Based on his remarks, McKibben is choosing to ignore studies such as the comprehensive 2025 report from the Clean Air Task Force that concluded that plant-level cost comparison “is a good metric to track historical technology cost evolution [but] is not an appropriate tool to use in the context of long-term planning and policymaking for deep decarbonization.” And the task force is not alone in finding that when electricity is treated as a system, solar loses its place as the cheapest low-carbon resource.
The dogmatism McKibben displayed at the Brooklyn meeting was unfortunate. We’re in a time when efforts to combat climate change are in retreat. A unified front is required to turn the tide. Instead of doubling down on absolutist positions, activists like McKibben who seem convinced that the solution to climate change is all-renewables, end of discussion, should be seeking common ground with others who want climate action but believe that nuclear power and natural gas must also play a role.
NYC Climate March, Sept 17, 2023. Photo: C. Komanoff.
Climate change activists need to build a bigger tent, rather than call anyone who disagrees with their positions a climate change denier. It is striking that McKibben stuck to his guns after saying in the same talk that the most important goal for everyone right now is to help climate change realists win more House and Senate seats in this year’s midterms. As some have noted, an absolutist position on natural gas appears less likely to achieve that win and politicians are following that advice.
Will McKibben evolve? He has demonstrated that he knows how to build a national climate movement centered around issues like divestment. Given the current political situation, he should focus on building an even bigger tent by welcoming all of the 85% who believe that we need to address climate change but do not agree with his ideological positions.
Rich Miller is an energy lawyer who has worked for a variety of stakeholders and now gives walking tours in lower Manhattan on the history of electricity.
Image generated with Claude. Why have we juxtaposed a bicycle with balcony solar? Read on.
First it was Plug-In Solar. Then it was Balcony Solar. Now it’s Guerrilla Solar, at least according to Inside Climate News, which yesterday proclaimed that The ‘Guerrilla Solar’ Era Has Arrived.
“It,” of course, is Modular solar panels. They’re the hot new photovoltaic solution: cheap enough to buy at Home Depot, easy to hang or prop to catch maximum rays, and small enough to fit on a balcony (if you’ve got one) and plug into your “home grid.” But, alas, too meager a generator of electricity to be more than a bit player in decarbonizing most U.S. homes.
How do I know? I’ve done the math.
A standard, lower-end 220-watt balcony solar array will produce 337 kilowatt-hours a year, or 28 kWh a month averaged over the course of a year. That’s for a 220W unit measuring 3.5 feet by 3.5 feet. (220W x 1/1000 x 17.5% x 8760 hours per year = 337 kWh. Calculation assumes a 17.5% full-year capacity factor, which is arguably generous for New York, where I live. )
Our balcony solar mashup. Top: an install in Germany. Bottom: Home Depot advert.
A typical U.S. home consumes 10,500 kWh a year, or 28 to 29 kWh per day, says Solartech, drawing on U.S. Energy Information Administration data. That puts a home’s daily power needs on par with a balcony solar unit’s monthly output. In effect, once each month the balcony array gifts a homeowner or renter a bit more than day’s full complement of electricity. And earth’s atmosphere gets the same respite: a 3 percent reduction in carbon emissions caused by the home’s electricity usage.
(The 3 percent figure could also be calculated directly by dividing 337 kWh per year of solar production by 10,500 kWh per year to run the home. For bigger or smaller arrays, just prorate your assumed wattage by my 220W; for 440W, say, double my figures.)
Balcony Solar metrics
Why write about balcony solar if it’s so inconsequential? CTC’s mission includes puncturing would-be climate balloons before they ascend too far. In the same vein, we practice quantification to make clear what does and doesn’t move the climate needle. (More on that further below.)
The best way to depict balcony solar’s climate value is to express it in terms of tangible metrics. We’ve selected two. Both assume the basic, lower-end PV array I assumed at the top: a 3.5 foot-square array whose peak output is 220 watts.
1. It would take 50 million 220W balcony solar units (bsu’s) to restore the climate benefit we destroyed in 2020-2021 when we shut the high-performing Indian Point nuclear power plant 32 miles from Midtown Manhattan.
2. A single person cutting back their driving by a mile a day would provide the same climate benefit over the course of a year as a single 220W bsu.
(Calculations in sidebar. Now you know why we led with images of an urban dweller as cyclist and balcony solar user.)
Yes, it’s dense — as befits a sidebar. The numbers tell a story. Follow the color co-ordination.
Ponder that: It would take fifty million smallish bsu’s to level up to the fossil fuel carbon emissions that Indian Point was keeping at bay by supplying the New York City area year in and year out with abundant carbon-free power. Deploying that many balcony solar units would entail 10 bsu’s for each of the 5 million households in the MTA’s service territory. (The Metropolitan Transportation Authority provides subway, bus and commuter rail transit in the five boroughs and seven suburban counties.) Or, if those same households upgraded to 1100-watt bsu’s, collectively they would still make up only half of the lost Indian Point power.
The second comparison, involving driving, is perhaps trickier to grasp but more interesting, since it relates to people’s behavior. Living differently isn’t part of public discourse, at least not in the USA, and especially when what’s being served up is using less. But “reducing,” as we might call it (remember “Reduce, Reuse, Recycle”? or, “Insulate, then Insolate”?) is just as potent for cutting emissions as switching to renewables — even more so when the reducing means driving less, considering the multitude of benefits that accrue from diminishing cars’ imprints on our communities. Still, staying on topic: driving just one fewer mile per day brings about the same shrinkage in carbon emissions as deploying one 220W solar array.
What Balcony Solar boosters are really saying
To be fair, our friends at Inside Climate News and, yes, The New York Times appear to be trying to modulate their balcony solar enthusiasm.
ICN‘s Dan Gearino, whom we cited up front, said he looked to Germany, the birthplace of balcony solar, to see if the units made sense for U.S. households. His takeaway: “It may make more sense financially to spend the cost of plug-in solar on insulation, air sealing or other basic measures to reduce energy use.” Hooray: insulate before you insolate.
Gearino helpfully interviewed renewables guru (and U.S. emigré) Craig Morris, who currently heads Germany’s plug-in solar trade association, Bundesverband Steckersolar. To Morris, balcony solar’s main advantages are that it provides power without taking up land, and that it affords people a way to “become participants in the transition to clean energy.” Behold, guerrilla solar. That, in turn, bolsters “the political consensus that supports the transition.” But Morris also made clear that widespread adoption of plug-in solar would only meet “about 2 percent of Germany’s electricity demand.”
Morris’s “about 2 percent” feels right for Germany. But not for the U.S., where widespread adoption of virtually any individual carbon alternative seems forever out of reach, and where the energy pie is so much larger — think giant fridges, freezers for beer, steroidal homes bursting with piles of powered toys, not to mention industrial and institutional electricity use that Morris correctly excluded from his figure.
Don’t forget to micro-dose. NYT headline + image for David Wallace-Wells’ guest essay (see text). Image by Rui Pu.
Both Gearino and Morris seem more measured than climate journalist Robinson Meyer, founding editor of Heatmap and frequent contributor to The Times, where he wrote about balcony solar in mid-June.
“New zero-carbon power kits will allow Americans to make their own energy choices,” declares the callout to the print version of Meyer’s NYT guest essay, The Tiny Solar Panel That Could Change America. (The even more expansive print headline invites us to “Forget Roofs. Backyard Solar Is the Next Frontier.”)
Wallace-Wells is of two minds. He calls balcony solar “a small way that apartment- and condo-dwelling Americans can take ownership of their energy choices and cut down their pollution on the margins.” No quarrel there, thanks to his qualifiers “small” and “on the margins.” Earlier, though, he opines that balcony solar units “have the potential to change how Americans understand and consume energy,” But read further and you’ll again see Wallace-Wells cautioning that “Balcony solar will play one small role in [the] drama” of transiting to the new world of clean, abundant energy.
Any such caveats are welcome these days, amid widespread solar hoopla. Still, it doesn’t seem to be in Wallace-Wells’ toolkit — or that of Inside Climate News and other mainstream climate journalists — to tutor their audiences as to the true limits of balcony solar and other panaceas. Just like it wasn’t in their field of vision a decade ago to lay out the true stakes of shutting Indian Point as Riverkeeper was singing its siren song.
What’s Next for NY Balcony Solar
Meantime, as Canary Media reported recently (and helpfully), New Yorkers concerned with climate and affordability are waiting for NY Gov. Kathy Hochul to sign the recently passed SUNNY (Solar Up Now New York) Act legalizing balcony and other plug-in solar. It would be head-spinning (and politically suicidal) if she didn’t, given near-universal support ranging from Con Edison to DSA Assembly Member Emily Gallagher, who told Canary Media, “This is the most popular bill I’ve [ever] worked on.”
My guess is that Hochul is waiting for the right moment, and perhaps the right “package,” that can advance and not undercut her push to launch five large new nuclear power plants around the state — one to be built by the public New York Power Authority, the others to be constructed and operated privately. A little bit of math, a la what we offered here a la Indian Point, might help her out.
The governor also must manage the veritable hot potato of her deferred implementation of the landmark 2019 Community Leadership and Climate Protection Act. She might do well to consider jettisoning the act’s unwieldy cap-and-invest centerpiece in favor of a straight-up carbon tax (with the revenues distributed pro rata to the state’s households) in its place. That, far more than balcony (or guerrilla) solar, could blow open the door to the “innovations and technologies we cannot yet imagine” that Wallace-Wells fantasized about in his Times essay.
On 11 June 2026, the Science Based Targets initiative (SBTi) published the most substantial revision of its flagship corporate framework since its introduction. The SBTi Corporate Net-Zero Standard Version 2.0 takes effect on 1 February 2027 and reshapes the way companies approach their net-zero targets.
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