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!
“…Protecting nature makes our business more resilient…”
For companies with land, water, food, fiber, or commodity exposure, the supply chain may be the most practical place to turn nature from a risk into an operating asset.
Your supply chain already has a nature strategy. It may be undocumented. It may live in procurement files, supplier contracts, commodity maps, and one spreadsheet nobody opens without coffee. But it exists.
If your business depends on farms, forests, water, soil, packaging, rubber, timber, fibers, minerals, or food ingredients, nature is part of your operating system. The question is whether you manage that system with intent, or discover it during a disruption, audit, or difficult board question.
That is why more companies are asking how to find Nature-Based Solutions in Your Supply Chain. Do not begin by shopping for offsets. Begin by asking where nature already affects cost, continuity, emissions, regulatory exposure, and supplier resilience.
What Nature-Based Solutions in Your Supply Chain Means
The European Commission defines nature-based solutions as approaches inspired and supported by nature that are cost-effective, deliver environmental, social, and economic benefits, and help build resilience. They should also benefit biodiversity and support ecosystem services.
In supply-chain terms, that becomes practical. Nature-based solutions in your supply chain can include agroforestry in cocoa, coffee, rubber, or palm supply chains. They can include soil health programs for food ingredients, watershed restoration near water-intensive operations, mangrove restoration linked to coastal sourcing regions, and avoided deforestation in forest-linked commodities.
The key test is business relevance. If your procurement team relies on a landscape, watershed, crop, or supplier base, that is where opportunity may sit. The best projects do not hover outside the business like a framed certificate. They plug into the system that already produces your revenue.
Why the Boardroom Should Care
For many companies, the largest climate and nature exposure sits outside direct operations. The GHG Protocol Scope 3 Standard gives companies a method to account for and report value-chain emissions across sectors. Purchased goods, land use, transport, supplier energy, and product use can make direct emissions look like the visible tip of a very large iceberg.
The Taskforce on Nature-related Financial Disclosures notes that many nature-related dependencies, impacts, risks, and opportunities arise upstream and downstream. That is why nature-based supply chain investments matter to boards. You are managing supply security, audit readiness, investor confidence, and regulatory preparedness.
For companies exposed to EU markets, this also connects to rules and expectations such as CSRD, CSDDD, EUDR, and SBTi FLAG.
Step One: Map Where You Touch Land, Water, and Living Systems
Finding Nature-Based Solutions in Your Supply Chain starts with mapping, not marketing.
Begin with procurement and Scope 3 data. Which categories carry high spend, high emissions, or high sourcing risk? Which suppliers depend on agriculture, forestry, mining, water-intensive processing, or land conversion? Which regions face water stress, heat, flood risk, soil degradation, deforestation, or biodiversity pressure?
The Science Based Targets Network uses a clear process for companies: assess, prioritize, set targets, act, and track. That sequence keeps companies from treating nature as a mood board. You identify where the business has exposure, then decide where intervention can create measurable value.
Step Two: Look for Operational Value Before Carbon Value
This is the center of CCC’s Dual-Value Model. A nature-based supply chain investment should do useful work for the business before anyone counts the carbon.
Agroforestry may improve farmer resilience, shade crops, protect soil, and reduce pressure on forests. Watershed restoration may reduce water risk for beverage, textile, or manufacturing sites. Soil health programs may improve the stability of agricultural inputs.
Carbon and sustainability value can still be created. In some cases, the project may support Scope 3 insetting. In others, it may generate verified carbon credits. Sometimes the main value may be resilience, readiness, and better supplier data.
The IPCC has found that ecosystem-based adaptation can reduce climate risks to people, biodiversity, and ecosystem services, with multiple co-benefits, while also warning that effectiveness declines as warming increases. That is a sober argument for acting early.
Step Three: Separate Insetting, Offsetting, and Resilience
Nature-based solutions in your supply chain are not automatically carbon credits. They are not automatically Scope 3 reductions either.
An insetting opportunity usually sits inside or close to your value chain. It may support Scope 3 reporting if the accounting rules, project boundaries, supplier connection, and data quality are strong enough.
An offsetting opportunity usually involves verified credits outside your value chain. High-quality credits can still play a role for residual emissions, but they should not distract from direct reductions or credible value-chain work.
A resilience opportunity may deliver business value even if you cannot claim a Scope 3 reduction immediately. That may include water security, supplier capacity, land restoration, biodiversity protection, or regulatory readiness.
Gold Standard’s Scope 3 value-chain guidance focuses on reporting emissions reductions from interventions in purchased goods and services. Verra’s Scope 3 Standard Program is being developed to certify value-chain interventions and issue units for companies’ emissions accounting. The direction is clear: stronger evidence, tighter boundaries, and more disciplined claims.
Step Four: Design for Audit-Readiness From the Beginning
Weak data is where promising nature projects go to become expensive anecdotes.
Before public claims are made, you need to know the baseline. What would have happened without the project? Who owns or manages the land? Which suppliers are involved? How will outcomes be measured? How will leakage, permanence, and double counting be addressed?
The GHG Protocol Land Sector and Removals Standard gives companies methods to quantify, report, and track land emissions, CO2 removals, and related metrics. This matters because land projects are rarely neat. Farms change practices. Suppliers shift volumes. Weather changes outcomes.
What Recent Corporate Examples Show
Recent case studies show that supply-chain nature work is becoming more serious, and more scrutinized.
Reuters has reported on insetting to reduce emissions within supply chains, including examples linked to Reckitt, Danone, Nestlé, Earthworm Foundation, and Nature-based Insights. The same article highlights familiar problems: measurement, double counting, supplier incentives, and credibility.
Reuters has also reported on companies using the Science Based Targets Network process to examine nature impacts. GSK, Holcim, and Kering were among the first companies with validated science-based targets for nature.
The Financial Times has covered the promise and difficulty of soil carbon in corporate supply chains, including a PepsiCo example in India where yields reportedly increased while greenhouse gas emissions fell. The lesson is that carbon, soil, biodiversity, farmer economics, and measurement need to be handled together.
A Practical Screening Checklist
A supply-chain nature-based solution deserves deeper review when you can answer yes to most of these questions:
- Does it sit in or near a material supply-chain hotspot?
- Does it address a real business risk?
- Can you connect it to supplier behavior, land management, or sourcing practices?
- Can the outcomes be measured?
- Are the claim boundaries clear?
- Does it support Scope 3 strategy, SBTi FLAG, CSRD, CSDDD, EUDR, or investor reporting needs?
- Are permanence, leakage, land rights, and community issues addressed?
Build the Asset, Then Make the Claim
Finding Nature-Based Solutions in Your Supply Chain is about identifying where your business already depends on living systems, then designing interventions that make those systems more resilient, measurable, and commercially useful.
For companies with material Scope 3 exposure, the right project can support supplier resilience, emissions strategy, regulatory readiness, and credible climate communication. The wrong project can become a glossy story with a weak audit trail.
Carbon Credit Capital helps companies design nature-based carbon and sustainability assets that embed directly into corporate supply chains. Through CCC’s Dual-Value Model, you can assess where sustainability investment may support operational resilience, Scope 3 insetting eligibility, regulatory readiness, and high-quality carbon or sustainability value.
Schedule your consultation with the carbon and sustainability experts at Carbon Credit Capital to explore how nature-based supply chain investments can support your next stage of climate strategy.
Sources
- European Commission: Nature-based solutions
- GHG Protocol: Corporate Value Chain Scope 3 Standard
- TNFD: Guidance on value chains
- European Commission: Corporate Sustainability Reporting
- European Commission: Corporate Sustainability Due Diligence
- European Commission: Regulation on Deforestation-free Products
- SBTi: Forest, Land and Agriculture FLAG
- Science Based Targets Network: Take Action
- IPCC AR6 WGII Summary for Policymakers
- Gold Standard: Scope 3 Value Chain Interventions Guidance
- Verra: Scope 3 Standard Program
- GHG Protocol: Land Sector and Removals Standard
- Reuters: Can insetting stack the cards towards more sustainable supply chains?
- Reuters: Three companies put their impacts on nature under a microscope
- Financial Times: The dubious climate gains of turning soil into a carbon sink
Americans are paying more for insurance, electricity, taxes, and home repairs every year. What many people may not realize is that climate change is already one of the drivers behind those rising costs.
For many households, climate change is no longer just an environmental issue. It is becoming a cost-of-living issue. While climate impacts like melting glaciers and shrinking polar ice can feel distant from everyday life, the financial effects are already showing up in monthly budgets across the country.
Today, a larger share of household income is consumed by fixed costs such as housing, insurance, utilities, and healthcare. (3) Climate change and climate inaction are adding pressure to many of those expenses through higher disaster recovery costs, rising energy demand, infrastructure repairs, and increased insurance risk.
The goal of this article is to help connect climate change to the everyday financial realities people already experience. Regardless of where someone stands on climate policy, it is important to recognize that climate change is already increasing costs for households, businesses, and taxpayers across the United States.
More conservative estimates indicate that the average household has experienced an increase of about $400 per year from observed climate change, while less conservative estimates suggest an increase of $900.(1) Those in more disaster-prone regions of the country face disproportionate costs, with some households experiencing climate-related costs averaging $1,300 per year.(1) Another study found that climate adaptation costs driven by climate change have already consumed over 3% of personal income in the U.S. since 2015.(9) By the end of the century, housing units could spend an additional $5,600 on adaptation costs.(1)
Whether we realize it or not, Americans are already paying for climate change through higher insurance premiums, energy costs, taxes, and infrastructure repairs. These growing expenses are often referred to as climate adaptation costs.
Without meaningful climate action, these costs are expected to continue rising. Choosing not to invest in climate action is also choosing to spend more on climate adaptation.
Here are a few ways climate change is already increasing the cost of living:
- Higher insurance costs from more frequent and severe storms
- Higher energy use during longer and hotter summers
- Higher electricity rates tied to storm recovery and grid upgrades
- Higher government spending and taxpayer-funded disaster recovery costs
The real debate is not whether climate change costs money. Americans are already paying for it. The question is where we want those costs to go. Should we invest more in climate action to help reduce future climate adaptation costs, or continue paying growing recovery and adaptation expenses in everyday life?
How Climate Change Is Increasing Insurance Costs
There is one industry that closely tracks the financial impact of natural disasters: insurance. Insurance companies are focused on assessing risk, estimating damages, and collecting enough revenue to cover losses and remain financially stable.
Comparing the 20-year periods 1980–1999 and 2000–2019, climate-related disasters increased 83% globally from 3,656 events to 6,681 events. The average time between billion-dollar disasters dropped from 82 days during the 1980s to 16 days during the last 10 years, and in 2025 the average time between disasters fell to just 10 days. (6)
According to the reinsurance firm Munich Re, total economic losses from natural disasters in 2024 exceeded $320 billion globally, nearly 40% higher than the decade-long annual average. Average annual inflation-adjusted costs more than quadrupled from $22.6 billion per year in the 1980s to $102 billion per year in the 2010s. Costs increased further to an average of $153.2 billion annually during 2020–2024, representing another 50% increase over the 2010s. (6)
In the United States, billion-dollar weather and climate disasters have also increased significantly. The average number of billion-dollar disasters per year has grown from roughly three annually during the 1980s to 19 annually over the last decade. In 2023 and 2024, the U.S. recorded 28 and 27 billion-dollar disasters respectively, both setting new records. (6)
The growing impact of climate change is one reason insurance costs continue to rise. “There are two things that drive insurance loss costs, which is the frequency of events and how much they cost,” said Robert Passmore, assistant vice president of personal lines at the Property Casualty Insurers Association of America. “So, as these events become more frequent, that’s definitely going to have an impact.” (8)
After adjusting for inflation, insurance costs have steadily increased over time. From 2000 to 2020, insurance costs consistently grew faster than the Consumer Price Index due to rising rebuilding costs and weather-related losses.(3) Between 2020 and 2023 alone, the average home insurance premium increased from $75 to $360 due to climate change impacts, with disaster-prone regions experiencing especially steep increases.(1) Since 2015, homeowners in some regions affected by more extreme weather have seen home insurance costs increased by nearly 57%.(1) Some insurers have also limited or stopped offering coverage in high-risk areas.(7)
For many families, rising insurance costs are no longer occasional financial burdens. They are becoming recurring monthly expenses tied directly to growing climate risk.
How Rising Temperatures Increase Household Energy Costs
The financial impacts of climate change extend beyond insurance. Rising temperatures are also changing how much energy Americans use and how utilities plan for future electricity demand.
Between 1950 and 2010, per capita electricity use increased 10-fold, though usage has flattened or slightly declined since 2012 due to more efficient appliances and LED lighting. (3) A significant share of increased energy demand comes from cooling needs associated with higher temperatures.
Over the last 20 years, the United States has experienced increasing Cooling Degree Days (CDD) and decreasing Heating Degree Days (HDD). Nearly all counties have become warmer over the past three decades, with some areas experiencing several hundred additional cooling degree days, equivalent to roughly one additional degree of warmth on most days. (1) This trend reflects a warming climate where air conditioning demand is increasing while heating demand generally declines. (4)
As temperatures continue rising, households are expected to spend more on cooling than they save on heating. The U.S. Energy Information Administration (EIA) projects that by 2050, national Heating Degree Days will be 11% lower while Cooling Degree Days will be 28% higher than 2021 levels. Cooling demand is projected to rise 2.5 times faster than heating demand declines. (5)
These projections come from energy and infrastructure experts planning for future electricity demand and grid capacity needs. Utilities and grid operators are already preparing for higher peak summer electricity loads caused by rising temperatures. (5)
Longer and hotter summers also affect how homes and buildings are designed. Buildings constructed for past climate conditions may require upgrades such as larger air conditioning systems, stronger insulation, and improved ventilation to remain comfortable and energy efficient in the future. (10)
For many households, this means higher monthly utility bills and potentially higher long-term home improvement costs as temperatures continue to rise.
How Climate Change Affects Electricity Rates
On an inflation-adjusted basis, average U.S. residential electricity rates are slightly lower today than they were 50 years ago. (2) However, climate-related damage to utility infrastructure is creating new upward pressure on electricity costs.
Electric utilities rely heavily on above-ground poles, wires, transformers, and substations that can be damaged by hurricanes, storms, floods, and wildfires. Repairing and upgrading this infrastructure often requires substantial investment.
As a result, utilities are increasing electricity rates in response to wildfire and hurricane events to fund infrastructure repairs and future mitigation efforts. (1) The average cumulative increase in per-household electricity expenditures due to climate-related price changes is approximately $30. (1)
While this increase may appear modest today, utility costs are expected to rise further as climate-related infrastructure damage becomes more frequent and severe.
How Climate Disasters Increase Government Spending and Taxes
Extreme weather events also damage public infrastructure, including roads, schools, bridges, airports, water systems, and emergency services infrastructure. Recovery and rebuilding costs are often funded through taxpayer dollars at the federal, state, and local levels.
The average annual government cost tied to climate-related disaster recovery is estimated at nearly $142 per household. (1) States that frequently experience hurricanes, wildfires, tornadoes, or flooding can face even higher public recovery costs.
These expenses affect taxpayers whether they personally experience a disaster or not. Climate-related recovery spending can increase pressure on public budgets, emergency management systems, and infrastructure funding nationwide.
Reducing Climate Costs Through Climate Action
While this article focuses on the growing financial costs associated with climate change, the issue is not only about money for many people. It is also about recognizing our environmental impact and taking responsibility for reducing it in order to help preserve a healthy planet for future generations.
While individuals alone cannot solve climate change, collective action can help reduce future climate adaptation costs over time.
For those interested in taking action, there are three important steps:
- Estimate your carbon footprint to better understand the emissions connected to your lifestyle and activities.
- Create a plan to gradually reduce emissions through energy efficiency, cleaner technologies, and more sustainable choices.
- Address remaining emissions by supporting verified carbon reduction projects through carbon credits.
Carbon credits are one of the most cost-effective tools available for climate action because they help fund projects that generate verified emission reductions at scale. Supporting global emission reduction efforts can help reduce the long-term impacts and costs associated with climate change.
Visit Terrapass to learn more about carbon footprints, carbon credits, and climate action solutions.
The post How Climate Change Is Raising the Cost of Living appeared first on Terrapass.
A carbon credit purchase is not a transaction that closes at issuance. The credit may be retired, the certificate filed, and the reporting box ticked. But on the ground, in the forest, in the field, and in the community, the work continues. It endures for years. In many cases, for decades.
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