How to Buy Carbon Credits in 3 Easy Steps (Guide to Buy Carbon Offsets)

Many well-known corporations (and, more recently, individuals) have been investing in carbon credits as a financial asset to eliminate and offset the carbon emissions produced by everyday activities… but not everyone is familiar with how to buy carbon credits.

The annual carbon footprint of the average American consumer is 16 tons⁷ …a staggering amount and one of the highest globally. But, personally taking action as an individual or company to remove greenhouse gas emissions can make a big difference for the planet… once you know how.

Buying carbon credits can erase a business or individual’s carbon footprint total, and can be done voluntarily or as a means of meeting government requirements. Carbon credits represent offset programs, and some specific ‘carbon removal’ programs are actually designed to eliminate CO₂ emissions for good.

The process for how to buy carbon credits is a lot easier and cheaper than you might think. It just takes 3 simple steps.

How To Buy Carbon Credits: 3 Easy Steps to Net Zero

Did you know it’s actually possible to be completely carbon neutral? By purchasing carbon offsets as credits, companies and anyone can achieve net zero, even if they are unable to change their activities.

Follow these steps to get started:

Step 1: Use a Carbon Emissions Calculator to Determine Your Climate Impact

In order to equalize and offset your carbon emissions, it’s imperative to calculate your current carbon footprint. This can be done using a variety of online carbon emissions calculators, which are especially handy for individual households. (Companies should use a business carbon footprint calculator.)

These calculators ask a variety of questions about your current lifestyle and activities. The calculator for individuals incorporates a variety of factors such as location where the person lives, number of adults in the household, type of appliances, methods of heating and cooling, number and type of pets, diet, wardrobe, modes of transportation, and more. A business footprint tool will asses things like OPEX and CAPEX costs, as well as facilities and operations details.

(Image: geralt¹⁵)

All of these factors influence the amount of emissions generated, and can be accurately measured based on scientific fact. Did you know that one gallon of gasoline produces a specific amount of CO₂ during combustion? The same is true for a kilowatt hour of electricity.

By identifying personal (or business) carbon emissions, it’s possible to pinpoint areas that can be adjusted to reduce them. For example, an Oxford study found that adopting a vegan diet could reduce an individual’s food-related carbon footprint by up to 73%.⁴

Moreover, American families’ use of Energy Star light bulbs or appliances since 1992 has reduced four billion metric tons of greenhouse gas emissions.⁵ Even owning less pets may help lower your carbon footprint since the production of meat-based pet food and the decline of wild populations of small animals (thanks to pets hunting them) has proven detrimental to the environment.⁶

What Are Carbon Credits?

Carbon credits are an innovative way to financially offset your environmental footprint and carbon-neutralize your life. Since almost every action generates carbon emissions and greenhouse gases, knowing how to buy carbon credits in the carbon marketplace is a way of pledging a contribution to eco-friendly initiatives like sustainable agriculture or reforestation.

Carbon credits are essentially a tradable certificate, which allows individuals or companies to emit one ton of carbon dioxide into the atmosphere. These tokens testify that their owner has invested in sufficient sustainable projects or practices to counterbalance that one ton of carbon. The term is used to indicate that a company or individual has bought themselves the right to release a limited amount of pollution.

The market for carbon credits is on track to reach $6.7 billion by the end of 2021.¹ Carbon credits are available both on a voluntary market system and also as a requirement for companies that exceed their governmental cap for carbon emissions (a “compliance market” or “cap-and-trade market” ¹).

Governments encourage companies to invest in sustainable practices both by legally requiring them to purchase carbon credits when they exceed their cap, and also by allowing excess carbon credits to become financial assets when a company does not hit its cap. Basically, a company that has a smaller carbon footprint can sell their credit to one that produces more… like a private energy company.

Step 2: Review Your Carbon Footprint Results

You may be a little shocked when you see your footprint result. The results typically include your annual personal carbon footprint in tons, as well as how you rank compared to other individuals globally. Many also contain the number of trees you’d need to plant to offset your carbon footprint on your own.

Reviewing your carbon emissions results gives you a breakdown of exactly how your individual lifestyle practices are impacting the environment, but more importantly, the statistics help visualize the areas that can be easily changed to reduce emissions.

Simply changing light-bulbs to LEDs can help reduce energy use and lower carbon footprints, even without having to know how to buy carbon credits.

With this information, you can learn how to buy carbon credits that will erase that impact on the environment.

Step 3: Buy Carbon Removal Credits for Your Business (or Yourself)

As soon as you view the results of your footprint calculation, you can become net zero by investing in carbon offsets and credits. When choosing a carbon credit or offset program, it’s important to pick ones that are designed to “remove” greenhouse gases from the atmosphere.

Carbon credits are available both on a voluntary basis as well as through a cap-and-trade system. Remember, carbon credits represent a funding amount that is being utilized within a offset program. The USDA is currently exploring the implementation of carbon markets, but does not plan to implement a federal carbon market quite yet.¹⁰

While businesses typically purchase credits which allow them to generate certain amounts of CO₂, individuals generally focus on buying offsets directly. Both processes are explained below.

Programs for Buying Carbon Offsets Online

Similarly to businesses investing in carbon credits, individuals can purchase carbon offsets online through a variety of programs. Expanding your offset portfolio is easy and can even be automated on a subscription basis to ensure your sustainable lifestyle is perpetuated. There are over 200 types of projects that can be invested in as carbon credits, from energy efficiency to fuel switching to sustainable agriculture.

Replanting Forests

Reforestation is a powerful removal tool, as trees that were destroyed by climate-change-induced disasters (i.e. wildfires), as well as by intentional deforestation, can be replanted. This signifies a positive end to a tragic and destructive cycle. Planting trees is also a visual, tactile solution–the number of trees planted directly correlates to reduced carbon emissions, as trees naturally offset carbon emissions by absorbing carbon dioxide. In fact, trees are natures most powerful carbon capture technology. This means that when reforestation efforts are conducted responsibly, they are a valuable carbon offset project in which to invest. When native trees are replaced, using native and varied species, entire ecosystems can be restored, which provided the planet with the tools it needs to regain climate balance.

Renewable Energy Solutions

Another common carbon offset program is renewable energy. This involves investing in companies that work to replace energy derived from fossil fuels with sustainable power from sources like sunlight, wind, rain, or tides. The four primary areas for which renewable energy is crucial include electricity, air/water heating/cooling, transportation, and rural energy services. Currently, only 20% of global energy consumption comes from renewable energy sources, which leaves the renewable energy credit market open for growth.

Another innovative subsection of renewable energy is organic waste digestion. This is a process by which bacteria break down waste (including animal manure, wastewater bio-solids, and food) and produce bio-gas or digestate. These outputs can be converted into electricity, heat, vehicle fuel, renewable natural gas, or organic fertilizer, and can also be used for crop irrigation or to create products such as building materials.

Methane Capture

Methane capture is another common offset project. This is a process by which methane is harvested from the places in which it’s produced (i.e. in landfills, via livestock, or in coal mines) and is subsequently burned and converted into yet another renewable energy source. This energy can be used for electricity, heat, or even to power a vehicle.

Carbon Offset Program Certifications

When investing in carbon offsets, it’s imperative to ensure that your money is going towards a verified and worthwhile project.⁸ That’s why several organizations have emerged to certify sustainable programs that offer carbon offsets. Databases containing lists of these projects are available on many of these organizations’ websites.

Private Market Credits (How to Buy Voluntary Carbon Credits)

Currently, U.S.-based carbon markets exist under private operators, such as Seattle-based Nori Inc. or Boston-based Indigo Ag Inc.

The nonprofit group Ecosystem Services Market Consortium also plans to develop a national carbon market in the next year, and is already supported by large corporations like McDonald’s.¹⁰

The cap-and-trade system has also not yet been federally implemented in the U.S. However, the Regional Greenhouse Gas Initiative has emerged, capping greenhouse gas emissions on a compliance market basis in ten (soon eleven) Northeastern states. This is a push towards creating even more financial incentive for companies to purchase carbon credits.

Mutual “Green” Fund Options and Carbon Capture Stocks

One low-risk way your business can expand its carbon portfolio is through carbon mutual funds or ETFs.¹² These funds and ETFs aren’t restricted to carbon credit-based companies only–they also include companies that currently have a low environmental impact or have pledged to reach net zero carbon emissions in the future. Examples include the iShares MSCI ACWI Low Carbon Target ETF (CRBN) and BlackRock’s U.S. Carbon Transition Readiness ETF (LCTU).

Other ETFs include “green bonds,” fixed-income debt instruments that focus on sustainable projects implemented by governments and companies (even on a local level, i.e. a small town implementing public transport). One such fund is the iShares Global Green Bond ETF (BGRN).

Fossil Free Funds is another option that helps investors identify ETFs that don’t include companies that have investments in fossil fuels.

Green funds only include companies from already green industries (i.e. electric vehicles, renewable energy). Examples include the iShares Global Clean Energy ETF (ICLN) and the First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN). This is how “already-green” companies like Tesla earn billions in revenue from carbon-credit sales (especially in places where compliance markets already exist, like California).¹²

Sophisticated investors can even invest directly in these “green companies.” Several publicly-listed companies offer such opportunities, including Tesla competitor NIO Inc. (NIO) and solar energy company First Solar (FSLR)

Carbon Offset Direct Investment

The most effective way to buy carbon credits is by investing directly in carbon offset projects. This option requires that you perform research to ensure that the offset program is actually working to eliminate carbon emissions, not simply ‘moving them around.’ This means that the offset program or project has measurable statistics to show that the efforts aren’t simply capturing carbon emissions that will be released at a later date.

Here’s what that means:

How Are Carbon Offsets Involved with Credits? (What’s the Difference Between Carbon Credits and Carbon Offsets?)

A carbon credit is equal to the right to emit one ton of carbon, correlating to sustainable practices employed by a company. If the company doesn’t emit the amount of carbon their credits legally allow them to, their carbon credits become surplus financial assets.²

Meanwhile, carbon offsets are also equal to the right to emit one ton of carbon but involve investing in sustainable projects outside of the individual or company. This means that a company already investing in internal sustainable practices can use their offsets elsewhere, such as in sustainable production projects in developing countries.²

(Image: geralt¹⁶)

While the cap-and-trade market is reserved for larger corporations, individuals can purchase carbon offsets. Some well-known billionaires buy offsets to neutralize the effects of their frequent airplane flights, for example. But the carbon offsets market isn’t just for billionaires–any individual can purchase them. After all, a single economy passenger’s flight from New York to Los Angeles generates 0.29 metric tons of carbon.⁸ So even if you’re not a jet-setting billionaire, your annual vacation or flight home for the holidays still has significant environmental impact.

Offsets typically cost between just $2 and $20 per metric ton of emissions neutralized. This means that for instance, the average driver could offset their car’s annual emissions for under $100 per year.³ Offsetting that single flight from New York to Los Angeles could cost as low as just $3.⁸

Identifying Carbon Removal Programs

But, buyers should understand that some carbon offset strategies are more effective than others. For example, a program that sells offsets based on a REDD strategy can sometimes hide the fact that the trees being ‘protected’ were never actually under threat of being harvested. Or, some afforestation programs are based on planting non-native trees on ‘farms,’ which will then be harvested in two or three decades. Such programs do little to actually solve the greenhouse gas problem facing the planet.

The best carbon offset programs involve those that actually remove emissions from the atmosphere, for good, including:

• Native tree planting projects that restore previously devastated forests, like the 51st Earth Day Carbon Offset Membership
• Methane capture technology that converts the dangerous gas into another form, or a usable form of energy
• Carbon capture technology that converts emissions into usable goods, like graphene.

These, and other projects like them, help remove the greenhouse gases contributing to climate change, without greenwashing the programs.

Do Carbon Credits Actually Work?

Some people criticize carbon credits as a concept, claiming that they aren’t effective in the long term. In their view, large corporations use the purchase of carbon credits as an excuse to continue to pollute the environment. This means that companies continue to emit greenhouse gases at a similar rate, but offset these emissions financially and call it even.

Moreover, in some cases, carbon offsets allow companies to invest in green projects in other countries while making no changes to their day-to-day operations back home. This means that carbon offsets have a technically equal impact to balance out the negative, but that no work is being done to make the company’s internal practices more sustainable.

While this is a valid argument in the case of larger corporations, carbon credits still have intrinsic value in holding companies accountable and contributing to generally positive sustainable projects.

Moreover, carbon offsets certainly work in the case of the individual. Purchasing offset credits is a valuable way to offset carbon emissions on any scale, contributing to projects that counteract modern practices that are difficult for the individual consumer to avoid. While critics are somewhat correct that carbon credits skirt the issue of switching to more sustainable practices in general, there’s no denying that carbon removal offsets are a smart solution for long term environmental changes.

Why It’s Important to Buy Offsets

In the modern world, it’s almost impossible to live a completely carbon-neutral lifestyle. That’s why purchasing carbon credits or offsets is crucial, as a means of balancing out the carbon emissions you can’t control. While some argue that carbon credits are an imperfect solution, investing in these offsets is a way to make a positive impact and makes up for eco-unfriendly practices that are difficult to avoid in everyday life. Moreover, knowing how to buy carbon credits and offsets is simple to do online, and ensures that you’re doing your part as an individual in combating climate change.