What are carbon credits?
Carbon credits are units of measurement assigned to quantify the reduction, avoidance, or removal of greenhouse gas emissions achieved by a specific project or activity. Carbon credits are traded on carbon markets, providing financial incentives for sustainable practices and emission reductions.
Why do carbon credits have different prices?
Just like consumer goods products in a market, carbon credits can have different prices based on supply and demand, and the markets are constantly evolving and changing.
There are a few factors that affect the carbon credits price, yet this doesn’t cover all of the complexities involved in the carbon markets. There are multiple players involved from buyers to intermediaries, and the carbon market can be seen as quite fragmented and lacking in transparency. It can be a huge ask for enterprises who are working on multiple factors to grow their climate solutions to navigate this additional source of growth alone, and that’s where the value of Nexus for Development can come to play – more on that later.
- Project type: Credits from projects that reduce emissions (like renewable energy projects) can be more valuable than those from projects that simply avoid emissions (like forestry projects). Credits from projects which remove emissions are priced even higher than projects which reduce or avoid emissions.
- Quality: High-quality credits, verified by reputable organisations including bodies such as Gold Standard can have an impact on the price. The higher quality the project the higher the price it can demand.
- Running costs: For high-quality carbon offset projects, the ability to sell carbon credits is what makes the project financially viable – carbon credits can be used to fund the research, development, implementation and ongoing operation of the project. Some project types come with higher setup and/ or operating costs than others, for instance if they require a substantial amount of research and development before getting started, or if they’re a technology-based project with high operating costs.
- Market conditions: Economic factors and policy changes can also impact prices. If new policies are implemented that set determined rules for business that can drive carbon credits price.
How Nexus for Development works in the carbon credits space
Navigating the carbon credit market can be confusing and time consuming, understanding if your enterprise is suitable, understanding pricing and certification can be off-putting. That’s where Nexus for Development steps in. Here’s how Nexus for Development helps SMEs and corporates:
- Expert Guidance: The team has deep expertise in the climate finance sector. They help enterprises understand the complexities of the carbon market and how to effectively engage with it, whether the business is aiming to sell carbon credits or buy carbon credits.
- Project Development Support: The Nexus team are specialists in helping enterprises develop projects that reduce emissions, ensuring they meet the standards required to generate high-quality carbon credits. They only work with Gold Standard certified projects.
- Market Access: Nexus for Development works to sell high quality projects to a global network of buyers to drive income for impact driven climate enterprises in Asia.
Why choose Nexus for Development?
Nexus for Development believes in creating sustainable solutions that benefit both people and the environment. Their experience in climate finance and commitment to innovative climate projects make a perfect partner for navigating the carbon credit space.
Conclusion
Understanding and navigating the carbon credit market can be a challenge, and carbon credits price, difficult to understand, enterprises benefit from the guidance and support of an organisation that lives and breathes this space. By partnering with Nexus for Development, enterprises can be confident that they are dealing with experts.
Ready to get started? Contact Nexus for Development to learn more about how to help thrive in the carbon credit market.