The Role of Carbon Credits in Achieving ESG Goals (Part 2)

Lucie Pustova
February 12, 2024
Climate and carbon credits

In part 1, we covered how carbon credits can be a pivotal part of a company's climate strategy, gave some background into the types of carbon credits, and highlighted a few studies released last year that compared the decarbonization activities of companies that purchase carbon credits and those that do not. In part 2, we will introduce various carbon standards and the processes of validation and verification and go into more detail about carbon credits from regenerative agriculture and Carboneg’s impact.

Understanding the Carbon Credit Framework

As discussed in Part 1, carbon credits can play a pivotal role in corporate environmental strategies, offering a pathway to compensate for residual emissions through verified projects. Standards set by organizations like Verra, Gold Standard, and Climate Action Reserve ensure the integrity of these credits. Projects undergo a validation and verification process where a third party ensures that the credits are genuine, effectively calculated, and adhere to principles of permanence, transparency, and additionality (meaning the emission reductions/removals would not have taken place without the project activities). Carboneg is currently pursuing certification under Gold Standard and also plans to have its 2023 European credits validated and verified under ISO 14064-2 in the coming months.

Purchasing carbon credits can be done through various channels, including marketplaces, brokers, or directly from project developers. Direct purchases, often made before credits are issued (called ex-ante credits), carry inherent risks but are essential for companies aiming to make significant impacts. Ex-post credits represent issued removals or reductions that have already taken place. Once utilized for offsetting emissions, credits are retired to prevent double-counting, ensuring transparency and accountability in emission reduction efforts. Ideally, credits should be retired on a public registry to ensure transparency and accountability.  

The Impact of Regenerative Agriculture on Carbon Sequestration

Agriculture significantly influences global biodiversity and climate, taking up 38% of land area and contributing, together with forestry, to 22% of global emissions. Farmers are facing increasingly severe weather events and soil degradation. As a project developer, we know this directly from our farmers not only in the Czech Republic but also in, for example, Ukraine, Peru, or Zimbabwe. One of the biggest challenges facing humanity will be to ensure sufficient food production in these soil conditions. However, soil degradation is not inevitable.

Regenerative agriculture emerges as a solution, enhancing soil health, biodiversity, and carbon storage while building a more resilient food system. Carboneg champions this approach, facilitating carbon sequestration in agricultural soils across four continents. By connecting farmers with companies through carbon credit purchases, Carboneg incentivizes the shift towards sustainable practices, offering training and financial rewards for carbon captured in the soil. In this way, we can reduce the risk for farmers in transitioning to regenerative agriculture, encouraging a deeper and faster transformation.

The methodology behind Carboneg carbon credits is grounded in physical soil sampling and rigorous laboratory analysis, ensuring accuracy and reliability. This approach is complemented by satellite monitoring, providing a comprehensive view of the carbon sequestration process. Importantly, regenerative agriculture has many benefits beyond carbon storage, such as improving biodiversity, limiting erosion, and increasing the water holding capacity of the soil.  

Ensuring the Quality of Carboneg Carbon Credits

Carboneg's commitment to quality is evident through:

  • Direct soil sampling and laboratory analysis
  • A scientifically robust methodology
  • Transparent reporting based on actual annual carbon gains
  • A reserve of 20% of credits for 10 years to guarantee carbon storage
  • A buffer pool of credits that are never sold, ensuring additional security
  • Guarantees of origin
  • Additionality
  • Social and environmental co-benefits, including positive impacts on farmers' decarbonization efforts

A Growing Interest in Carbon Credits in the Czech Republic

The Czech Republic is witnessing an increase in interest from a diverse range of organizations, from large corporations to small businesses and non-profits, in purchasing carbon credits to offset various emissions, such as business travel or the carbon footprint of a particular product or event. This interest is part of a broader engagement with ESG reporting and the integration of carbon credits into corporate sustainability strategies. Clients such as the German branch of Deloitte or the Czech telecommunications company O2 have invested in Carboneg carbon credits in 2023.

Carboneg's initiatives, including seminars and webinars, aim to educate and engage stakeholders on the value and impact of carbon credits. Even though the voluntary carbon market has been growing each year, we find that this is still a new topic for many corporations.

We are currently offering carbon credits from farmers in the Czech Republic and Slovakia. By integrating Carboneg carbon credits into their sustainability strategies, corporations can address their carbon footprint directly in the Central European context, providing direct support for local farmers in their transition to more sustainable and resilient agricultural practices.

Carboneg's Vision and Impact

With over 51,000 tonnes of carbon already sequestered in the Czech Republic and Slovakia, Carboneg is expanding its reach to countries like Kyrgyzstan, Ukraine, South Africa, and Zimbabwe. The goal is ambitious: to store 1 billion tonnes of carbon in the soil by 2030, demonstrating the scalable impact of regenerative agriculture on global carbon reduction efforts. Through these initiatives, Carboneg not only contributes to the fight against climate change but also supports the transformation of agriculture into a more sustainable, resilient, and productive sector.

Read more about carbon credits here (Part 1.)

Read more about our project in our Company Report.

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