Carbon Market

Carbon Credit mechanism

There are two main types of carbon markets:

  • Regulatory compliance market (e.g. in Quebec, Ontario, California, EU ETS etc.)
  • Voluntary market (for companies that want to offset their emissions and green their operations)

Both markets have a similar process:
  • Protocol: Determines the greenhouse gas reduction (expressed in CO2 equivalent), the exact process and the optimal way to administer and monitor/report the results.
  • Once this protocol is established:
      • in the regulatory compliance market, the project must be accepted by the government agency that controls the carbon projects in the target country (in Quebec, the Ministry of the Environment);
      • in the voluntary market, the project must be certified according to a recognized standard (Gold Standard, Verra, etc.).
  • The project is then registered in an official database which will keep the exact account of the credits sold and produced.
  • Implementation of the project
  • Sale of credits (sometimes called "unit" or "offset")

Regulatory Compliance Market

The compliance market is used by companies and governments that by law have to account for their GHG emissions. It is regulated by mandatory national, regional or international carbon reduction regimes.

The Regulatory Compliance Market in Quebec has only 7 protocols to date. 13 more are being written, 2 of them are directly addressing Bacterras' products domain (Enteric Fermentation and WasteWater Treatment). In Quebec, the Ministry of Environment (MDDELCC) named Bacterras as Stakeholder for the Enteric Fermentation protocol.

Voluntary Market

On the voluntary market the trade of carbon credits is on a voluntarily basis. The voluntary market has become very important for agriculture and forestry projects. Voluntary carbon credits (VER) are mainly purchased by the private sector. Corporate social responsibility (CSR) and public relations are the most common motivations for buying carbon credits. Other reasons are considerations such as certification, reputation and environmental and social benefits. Some companies offer clients to neutralise their carbon emissions (e.g. British Airways offers carbon neutral flights; Enterprise, National and Alamo Rent a car offers carbon neutral rental). The private sector can either purchase carbon credits directly from projects, companies (e.g. CO2Logic) or from carbon funds. The credibility of the standard and the story behind the credits plays a crucial role in the valorisation of the credits on these markets. 

Carbon offset

A carbon offset is a reduction in emissions of carbon dioxide or greenhouse gases made in order to compensate for or to offset an emission made elsewhere. Carbon offsetting has gained some appeal and momentum mainly among consumers in western countries who have become aware and concerned about the potentially negative environmental effects of energy-intensive lifestyles and economies.  When you decide to offset, it’s important to ensure that your offset investment goes to projects that are developed to rigorous standards to ensure high quality carbon offsets. These include the Gold Standard, Verra (formerly the Voluntary Carbon Standard or VCS), and various government-regulated standards. Bacterras' certifications are under progress with Verra.