Earlier this month in Glasgow, the Conference of the Parties finally agreed on how international carbon credits should be exchanged under Article 6 of the Paris Agreement. After more than five years of negotiations, many of the draft’s sticking points were resolved. «Transparency, justice, consensus and interdependency, these are the pillars for the successful execution of Article 6 of the Paris Agreement. Let’s keep in mind that this is arguably the most ambitious article for climate action, since it manages to involve the private sector,” comments José Lindo, Co-Founder and Head of Impact at ClimateTrade. Here are the top 3 Article 6 issues that world leaders agreed on in Glasgow, and what these decisions mean for international carbon markets. Double accounting In theory, allowing countries to fund greenhouse gas (GHG) mitigation projects abroad in order to meet their own decarbonisation targets, or Nationally Determined Contributions (NDCs) is a great way to reduce the global cost of the transition. According to the International Emissions Trading Association (IETA), an independent, industry-led organization working to create an efficient emissions trading framework, this form of international cooperation could lead to savings of US$250 billion a year by 2030, compared to individual implementation. However, there needs to be a mechanism in place to prevent the emissions reductions deriving from such projects from being claimed twice, once by the funding country, and once by the host country, where the project is implemented. Without such a mechanism, environmental groups warn that up to 30% of global emissions are at risk of double accounting. The final text, on which 200 nations agreed in Glasgow, states that the host country (the country where the mitigation project is being carried out), has the power to decide whether the credits generated should go towards its own NDCs or be sold internationally. If a credit is authorised for sale, the host country has to add an emission credit to its record, while the purchasing country can deduct one, avoiding double accounting. However, this rule only applies to mandatory carbon markets, where countries have a national carbon register and accounting system. In the voluntary market, where companies look to offset their emissions outside the remit of national targets, there is currently no supervision to avoid double accounting. Traceability in voluntary markets is therefore crucial: this is why we at ClimateTrade use blockchain technology to reliably track and trace carbon credits. “We can’t tackle the climate crisis solely from the public sector. Our marketplace allows companies and other entities to offset their carbon footprint directly by selecting the most appropriate carbon credits from projects around the world. By supporting and promoting these projects, we also provide better living conditions to their local communities and generate a direct impact on the environment, fostering the regeneration of the planet’s natural balance and helping to mitigate climate change. And thanks to blockchain technology, we can effectively guarantee that the carbon credits are cancelled in their corresponding registries, and that the money paid in the transaction goes directly to the project source,” adds Lindo. CDM integration In 1997, 84 countries signed the Kyoto Protocol, which included a Clean Development Mechanism (CDM) allowing GHG emissions trading between countries. But since the Paris Agreement, signatories argued over whether emissions reductions achieved through the CDM should be allowed to continue to generate carbon credits under the new framework. Countries that were against this provision argued that it would diminish the impact of Paris goals, whereas those that defended it said it would reduce the cost of the transition, since these projects are already paid for.  The final rulebook states that offsets generated under the CDM since 2013 can be carried over to the new system. This cut-off date has been heavily criticized: according to research by Climate Analytics, it will allow a global rise in emissions of 320 million tons of CO2 — the equivalent of the 320 million offsets generated since 2013. Carbon trade tax Article 6 mentions the creation of a centralized carbon trade mechanism to replace the Kyoto Protocol’s CDM. This mechanism will be supervised by “a body designated by the Conference of the Parties”, most likely the UN. Transactions belonging to this scheme will be taxed to cover administrative costs, but also to support more vulnerable countries in their decarbonisation efforts, via the Adaptation Fund.  Before Glasgow, there was a degree of uncertainty around which transactions would be taxed, as some countries were asking for the tax to be extended to any voluntary emissions transfer between countries. Doing that would have placed centralized and bilateral trading schemes on a level playing field, avoiding a preference for transactions outside the supervised mechanism. It would also have increased the proceeds available for climate financing in vulnerable countries.  But in the end, the Conference of the Parties has decided that only the transactions conducted via the centrally supervised mechanism would be taxed, at a rate of 5%. More about carbon markets Carbon markets as they are now have raised doubts amongst climate activists, countries and companies, and their fears are justified if we don’t start talking about a fair price for carbon and ensuring that funds reach the right countries and their communities. The carbon market can be improved, as can government transparency and. tax systems around these transactions. As a member of the Taskforce on Scaling Voluntary Carbon Markets, ClimateTrade has participated in structuring the Core Carbon Principles. We’ve also worked on the ICC Carbon Pricing Mechanism as representatives of ICC Spain (International Chamber of Commerce). ClimateTrade is the world’s leading climate marketplace. We help companies offset CO2 emissions and we support climate-positive projects to ensure a sustainable future for our planet. In other words, we are carbon market experts. Contact us to find out more.

With ClimateTrade, organizations can easily calculate their carbon footprint. Faced with the heated discussion about the climate crisis and the urgency of taking effective actions to reduce the consequences of global warming, many companies are beginning to work on their ESG (Environmental, Social and Government) objectives. Among which is the “calculation of the carbon footprint”, which allows them to visualize a clear panorama of the impacts caused to the environment resulting from their business models. Calculate carbon footprint In a net zero world, every company will be required to calculate and offset its carbon footprint via different CO2 emissions offsetting projects. In many countries, large companies in polluting sectors are already asked to do so by law, and by the end of this decade, this requirement will be extended to many more countries, sectors, and types of companies. In other words, now is the time to prepare for this obligation.  Do you need help to calculate the carbon footprint of your company? Fill in the form and a ClimateTrade expert will contact you. What is the carbon footprint? The carbon footprint is the sum of all the greenhouse gases a person, company or even country releases into the atmosphere, expressed in CO2 equivalent. These emissions are responsible for global warming, and as such, they need to be addressed in the fight against climate change. This is why many governments are putting a limit on the amount of emissions companies can produce, which is often combined with a tax on carbon. Many countries and companies have pledged to be net zero by 2050, which means that all their carbon emissions will be offset, and none will enter the atmosphere and destabilize the climate. Calculating the carbon footprint of a company means assessing its impact on the climate. It is a necessary step in combating climate change at company level. Methodology to calculate CO2 emissions Whatever your sector is, it is crucial to follow standard methodology to calculate your carbon footprint. This will ensure you are aligned with industry best practices, and make it easier to report and offset your emissions. Greenhouse Gas Protocol The most widely used methodology to calculate carbon footprint, whether manually or through a carbon footprint calculator, is that of the Greenhouse Gas Protocol (GHG Protocol). The first edition of this standard was published in 2001 after a decade of international cooperation. In 2016, 92% of Fortune 500 companies reported using this standard for carbon emissions calculation. The GHG Protocol offers several relevant methodologies: The Corporate Accounting and Reporting Standard is its generic guidance for companies and other organizations preparing a corporate-level GHG emissions inventory; the Corporate Value Chain Standard focuses on scope 3 calculation and reporting; and the Product Life Cycle Standard can be used to understand the full life cycle emissions of a product and focus efforts on the greatest GHG reduction opportunities. Emissions classification to calculate carbon footprint  With this protocol, emissions can be classified into three areas: Scope One: Direct GHG Emissions Scope 1 emissions are those generated by a company’s own operations. For instance, for oil and gas companies, scope 1 represents a very large share of the carbon footprint: their core activities of drilling, extracting and refining petrol and natural gas release large amounts of greenhouse gases into the atmosphere. On the other hand, service-oriented companies such as banks and financial institutions tend to have small amounts of scope 1 emissions, since they work in offices and don’t use polluting processes to make their products. To calculate your scope 1 emissions, think about what you and your employees do on a daily basis. Where do you work (office, factory, field, etc.)? What do you do? How polluting are your daily activities? Scope Two: Indirect GHG emissions associated with electricity These are indirect GHG emissions generated by electricity, process heat or cold, or steam used in processes, as well as transportation. They can begin to be counted from the invoices of the energy supply companies with the breakdown of the kilowatt-hours, therms or cubic meters that they supply. All sectors require electricity to operate, so all companies need to calculate scope 2 emissions. Start with your power supply: how much of it comes from renewable sources, and how much from fossil fuels? How much power do you use for your operations on a yearly basis?  This will help you assess how much of your carbon footprint comes from electricity. The same exercise applies to heating or even cooking: companies often use natural gas for these activities, so it is important to calculate the emissions related to them. Then, look at transportation: does your company operate a fleet? Do your vehicles have combustion engines or are they electric? What kind of distance do they drive every week, month or year? This information will allow you to calculate the emissions related to the transportation fuel you use for your operations. Scope Three: Other indirect emissions Scope 3 emissions can be considered “out of your control”: they include the emissions generated by your providers and by your clients in the lifecycle of your product or service. For instance, going back to oil and gas companies, while the extraction and refining of the raw material belongs to scope 1, the combustion of these products in everyday activities such as driving or cooking are part of their scope 3. This is why the general carbon footprint calculation methodology includes scope 3: companies have to make changes and incentivize decarbonization throughout their supply chains. What to include in the Scope 3 carbon footprint of an organization?  In particular, it is recommended to include: emissions from the means of transport used by workers between their residence to their workplace emissions from business trips by executives or middle managers, especially flights, trips by private or rented car, hotel stays, boat or ferry trips emissions from outsourced computing services, such as cloud services the emissions of the logistics companies collecting or delivering the products  It is worth noting that Scope Three

In a brand new sector that is evolving rapidly, understand where your company fits in the carbon credit market structure. What is the difference between the mandatory and voluntary carbon credit market? As its name suggests, the mandatory market is used by companies and governments that are legally mandated to offset their emissions. The countries that have joined these markets are those that have accepted and adopted the emission limits established in the Framework of the United Nations Convention on Climate Change. (UNFCCC) The voluntary carbon market, on the other hand, operates outside the compliance markets but in parallel, allowing private companies and individuals to purchase carbon credits on a voluntary basis. Who regulates the mandatory carbon credit market? This market is regulated through international, regional and sub-national carbon reduction schemes, such as the Clean Development Mechanism under the Kyoto Protocol, the European Union Emissions Trading Scheme (EU-ETS) and the California Carbon Market. Each ton of CO2 is measured in carbon credits or CERs (Certified Emission Reductions). These credits or CERs are generated in the implementation phase of the project; and are issued once the reduction has been credited. Projects wishing to offer CERs in the market will need to have their emission reductions validated by Designated Operational Entities (validators and verifiers) and registered by the CDM Executive Board to ensure that real and measurable emission reductions are achieved. How does the voluntary carbon credit market work? The main objective for acquiring Verified Emission Reduction (VER) credits, is to neutralize the carbon footprint, motivated mainly by Corporate Social Responsibility (CSR) and public relations. Other reasons are considerations such as certification, reputation and environmental and social benefits. Companies and individuals can acquire or buy carbon credits directly from projects, companies or carbon funds. However, as in the regulated market, all VERs must be verified by an independent third party and must be developed and calculated according to one of the existing VER standards. Basically, the main difference is that a VER (voluntary market), unlike CERs (mandatory market), cannot be used to achieve obligations under the Kyoto Protocol compliance regime. However, a CER can be accepted by entities wishing to voluntarily offset their carbon footprint. ClimateTrade operates within both the voluntary offset market and the mandatory market. We have a wide portfolio of projects with credits of all types and a professional team with extensive experience in this field.

The carbon footprint includes all greenhouse gas (GHG) emissions, whether direct or indirect, that result from an individual, company or country’s activities. Since the industrial revolution, day-to-day human activity in all its diversity involves the consumption of fossil fuels to a greater or lesser degree. As a result, greenhouse gases (GHGs) are emitted into the atmosphere, leading to an increase in the total radiative forcing of the earth, increasing the temperature (global warming) and leading to climate change. In other words, GHGs, whose concentration has increased significantly in recent decades, absorb part of the heat reaching the earth from the sun, which, in turn, increases the temperature of the planet. The main greenhouse gases are carbon dioxide, methane, nitrogen oxide, water vapour and ozone, but it is CO2 that contributes the most to the increase in radiative forcing, and it also derives to a large extent from human activity. The carbon footprint The carbon footprint is the set of GHG emissions generated directly and indirectly by a person, a group, an organisation, a company, a region and even a product, a service, or an event. The tons of carbon equivalent (t CO2e) measure the carbon footprint because CO2 is the most abundant gas produced.  In other words, the carbon footprint is a fundamental environmental metric that provides information on the sources and sinks of GHG emissions. It serves as a management tool to identify the actions that contribute to the increase or decrease of the volume of GHG emissions of our activity related to our impact on climate change. Today, the climate urgency has highlighted the need for a global transformation that begins with the individual, influences the business practices and produces changes at the governmental level. It is time to establish an economic model that values the needs of people and the environment, and that is sustainable over time and neutral in GHG emissions. The carbon footprint and the individual At the individual level, the carbon footprint would be the set of GHG emissions that a person generates in their daily activities, for example: by using energy in the form of electricity or heat, or by consuming fuels for transportation, or with the use of products or services, among other sources of emissions. Therefore, HC helps to identify those everyday actions that can reduce GHG emissions and fight climate change. Hence, the importance of bringing the issue of global warming into the spotlight and launching awareness programmes, so people can make daily choices that are less harmful to the environment and society as a whole. The carbon footprint of companies When we turn our attention to the business sector, many companies have been reprimanded for the effects of their activity on climate change due to the large amounts of GHG emissions that they release into the atmosphere. Nowadays, companies of all sizes have the opportunity to lead the change towards a carbon-neutral society. For these reasons, the carbon footprint is present in the sustainability strategies of many companies that want to manage the GHG sources and sinks, and their carbon footprint consequences for their business and stakeholders. The calculation of an organisation’s carbon footprint involves the inventory of GHG sources and sinks derived from the activity carried out by that organisation. The quantity of the data will influence the complexity and scope of the study. Therefore, a company’s carbon footprint provides a numerical value of the total GHG emissions resulting from its activity. This is only the first step in managing GHG emissions and moving towards neutrality. The second step would be to draw up an emission reduction strategy or plan (with actions aimed at reducing GHG emissions and a system for monitoring the reduction results). Finally, after implementing the reduction plan, remaining GHG emissions should be compensated through GHG reduction or removal projects outside the company. Why do I need to know my company’s carbon footprint? Understanding your company’s carbon footprint is important in order to know where to take action in your production chain to improve processes and reduce the environmental impact, particularly around carbon emissions. You can also achieve savings by reducing the energy consumption of some of these processes, so calculating the carbon footprint os also a tool to reduce production and performance costs. It allows companies to make better decisions and achieve a more efficient management of energy consumption in all areas: mobility, lighting, heating, etc. Discover how to calculate carbon footprint. Once you have calculated your company’s carbon footprint, you will need to offset the GHG emissions that cannot be abated by other means, by purchasing carbon credits and from sustainable development projects. These credits are expressed in tons of CO2, representing the equivalent GHG emissions, and can also be generated by carbon capture projects. Offset carbon footprint with ClimateTrade ClimateTrade’s marketplace offers more than 150 certified sustainable projects that meet the Sustainable Development Goals stipulated by the United Nations. Through our state-of-the-art technology, we ensure that the financing of these projects is transparent and traceable, guaranteeing, at the same time, direct and positive impacts on the environment and society. If you would like to know more about the carbon footprint or how to calculate it, you can contact our team of specialists.

Understand how the EU ETS actually works and the key measures that should be taken by your company. Everything you need to know about European Union Emissions Trading System (EU ETS) The European Union Emissions Trading Scheme (EU ETS) is the main tool for cost-effectively reducing greenhouse gas emissions. The EU ETS was launched in 2005 and currently accounts for more than three-quarters of international carbon trading, making it the world’s largest carbon market. How does it work? Cap and trade, these are the two words that define how this system works. Companies are allowed to emit a single EU-wide cap on certain greenhouse gases. Within that limit, companies receive or buy allowances (EUA) that they can trade with each other according to their needs. Each allowance is equivalent to one tonne of carbon dioxide (CO2), the most common greenhouse gas. 1tCO2 = 1 allowance (EUA) Let us assume that the limit is set at 10tCO2. If company A has issued a total of 6tCO2 at the end of the year, it can sell company B 4 allowances (equivalent to the 4tCO2 it has not issued). Companies can also buy limited quantities of credits from voluntary market emission reduction projects around the world, with a limitation of about 20% of the set. How should companies proceed? At the end of each year, companies must have acquired enough allowances to cover all emissions, otherwise they are subject to heavy penalties. What is the price of carbon? Currently, the price for a tonne of CO2 is about 30€. However, the price for emitting carbon dioxide into the atmosphere will double by 2021 and quadruple by 2030, according to a report published by the Carbon Tracker Organisation. According to this study, if the European Union‘s emissions are to remain in line with international targets for preventing climate change, the price of carbon dioxide emissions will have to rise to redirect public and private investment towards production models that help decarbonise the economy. How to sell or buy CO2 emission rights? Climatetrade has a qualified and experienced team that operates with a broad base of industrial partners. We provide information, knowledge, and guidance to access markets for Emission Rights (EUAs), Carbon Credits (CERs), Reduction Units (ERUs) and Voluntary Reductions (VERs) in a simple, equitable and efficient way. For further information on this service, please contact: info@climatetrade.com