How to Purchase Carbon Credits - Part 1

How to Purchase Carbon Credits – Part 1

Carbon Credits – Their Importance and Impact on Your Business

For several posts we have discussed carbon neutrality. What it is, its importance and impact on the current energy market, and why it should be a major concern for your business.In our last post, we discussed how carbon credits can alleviate this concern, giving your business tools to help sustain your profitability for the long term.

We also explained what carbon credits are and exactly how they are created. In this post, we will get more into the “nuts and bolts” of purchasing carbon credits.

We’ll walk you through the “nuts and bolts” of how to purchase carbon credits.

Nuts, bolts and screws against a dark background; how to purchase carbon credit - part 1

A business valuation will give you an accurate amount of carbon emissions your business needs to offset.

White flow chart on black background with finger pointing to box on chart. How to purchase carbon credits - Part 1

Start with a Personal Business Valuation

A business valuation will give you an accurate amount of carbon emissions your business needs to offset.Before purchasing carbon credits, you need to begin with a personal business valuation. This is probably the most important part of the purchasing process. Why? To ensure that you have an accurate picture of the amount of carbon emissions your business needs to offset.

For example, every fuel distributor knows they have carbon emissions based on the amount of fuel they sell and/or deliver to customers. However, there are carbon emissions from your business operations that need to be considered as well.

Westlark Advisors will review a client’s annual carbon footprint in order to establish a base amount of carbon that must be offset. Once this has been established, it is possible to look at carbon credits.

Options for Purchasing Carbon Credits

There are multiple options for purchasing carbon credits but we will group them into two general categories.

General Contract

First, there is the ability to purchase a general contract. As an example, the Chicago Mercantile Exchange (CME) created futures contracts based off the Nature-based Global Emissions Offset (NGEO). This is classified as a general contract because any global project that meets NGEO specifications could be used to deliver a carbon credit to an owner of this contract.

General contracts and specific certified projects are both options for purchasing carbon credits.

Tree growing out of cupped hands; How to purchase carbon credits - Part 1

Specific Certified Project

Our second general category involves purchasing credits from a specific certified project. These carbon credits could be from a project anywhere in the globe, and these credits could also have a wide variance in value.

Both categories- general and specific – are available to purchase to help your company achieve carbon neutrality.

Once you make the choice of which category to purchase, what happens next? Check out our next blog for the answer to that question. Contact your Westlark Advisors team for expert advice about purchasing carbon credits.

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How to Purchase Carbon Credits – Part 1

By JD Buss

How to Purchase Carbon Credits – Part 1