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The carbon market today is primarily driven by supply and demand, regardless of the implications to the project in terms of long-term viability.

Markets can be very effective for driving competition and reducing the cost of accomplishing an objective. Paying for carbon credits at prices below what it costs to maintain a project means that these projects may stop operating in the vulnerable communities they support. Further, neglecting to fully account for the real value they deliver in beyond-carbon development benefits can accelerate a race to the bottom, meaning that the highest quality projects might be the first to fail.

The Fairtrade Carbon Credit pricing model provides a great example of how this works in practice, and is currently the only application in carbon markets today. This model calculates a minimum price that ensures the average costs of the projects will be covered. However, in the Fairtrade model a buyer also pays an additional premium on top. This “Fairtrade Premium” goes directly to the local community – small holder farmers and producers in rural communities – to fund activities that help them adapt and become more resilient to an already changing climate.

The Fairtrade Climate Standard also features requirements for buyers of credits to reduce their own carbon footprints. Companies like DHL and Marks & Spencer have already committed to purchasing in Fairtrade Carbon Credits. 

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Monetizing Greenhouse Gas Reduction Credits

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Collaborative Technologies is developing carbon reduction projects around the world. We will  identify, structure, and develop solutions using in-house, best of breed technologies that deliver measurable environmental, social and economic benefits to our partners.

To meet the ambition of the Paris Agreement to keep global warming well below 2°C and achieve the UN Sustainable Development Goals (SDGs), climate action cannot be one-dimensional.

Efforts to reduce greenhouse gas emissions must also help the world develop on a sustainable pathway – providing access to clean energy and water, good health and nutrition, secure livelihoods, and thriving ecosystems.

This means that climate and development interventions must be holistic and high-impact, allowing every dollar invested to deliver as much as possible.