Viridios Capital CEO Eddie Listorti Explains How Carbon Offset Credits Work

First Posted: Mar 09, 2021 10:56 PM EST
Carbon offset

(Photo : Carbon offset)

Carbon emissions continue to contribute to climate change and to combat this, many businesses are now working to reduce their emissions. This is partially due to regulations but also because consumers are currently seeking out environmentally responsible companies.

Greenhouse gases are already lower than they were just a few years ago, and carbon offset credits contributed to that decline. In the years to come, these offsets will continue to play a part in reducing emissions. Some carbon offset programs help companies remain compliant, while others provide a way for organizations to meet their own goals to reduce their impact on the environment.

Eddie Listorti is the CEO of Viridios Capital -- a company focused on ensuring capital delivered to sustainable developments is fair compensation. Below, Mr. Listorti explains how carbon offset credits work.

Mandatory Compliance Programs

The government sets limits on carbon emissions. Each company or institution must not exceed a capped amount of emissions. However, some businesses will struggle to accomplish their goals without going over their emissions cap. Through a carbon offset program, companies that violate their cap will purchase credits by funding carbon offset programs.

For example, a manufacturer that emits more than its permitted cap can purchase credits to fund forest conservation programs or other initiatives to reduce overall emissions.

Voluntary Offset Programs

Voluntary offset programs work similarly to mandatory compliance programs. However, instead of meeting a government requirement, these initiatives allow companies to make their own commitments to improve their environmental impact. The price for offsetting carbon often relates to the program, as there is no clear cost for releasing carbon.

The government does not regulate these programs, so businesses must invest in legitimate initiatives. Anyone selling carbon offsets should have a clear and detailed portfolio that illustrates their work.

Certifying Offset Programs

Companies that engage in carbon offsets need to do their homework. It is not uncommon for an offset program to occur in a foreign country. Many nations have limited resources available to protect the environment, and yet, emissions impact everyone.

While these programs can be beneficial, distance can make it more challenging to determine whether a program truly serves its purpose. For this reason, non-profits have created certified climate action programs that develop reliable standards, such as the following:

Voluntary Carbon Standard (VCS)

Verra, a registered 501(c)(3) non-profit, started VCS in 2005. The program is now the most used voluntary carbon offset program in the world. The program is responsible for the removal of over 200 million tons of greenhouse gases. VCS works to prevent double-counting and to ensure that the project delivers the reductions promised. The organization also makes sure that efforts do not negatively impact local communities.

Gold Standard

The WWF and other NGOs created Gold Standard in 2003. The organization works to achieve the goals of the Paris Agreement. So far, Gold Standard has removed more than 151 million tons of carbon from the atmosphere.

The Climate, Community & Biodiversity Standards (CCB) under Verra

CCB is not a standard on its own but works to identify projects that will combat climate change while protecting communities and biodiversity. Many of the projects focus on land management and sustainable development. Verra manages the organization through partnerships with CARE, the Nature Conservatory, the Rainforest Alliance, Conservation International, and the Wildlife Conservation Society.

Businesses can look to these organizations to find reliable carbon-reducing programs that work to combat climate change with the most impact.

About Eddie Listorti

Eddie Listorti is the Founding Partner and CEO of Viridios Capital, based in Sydney. He has a proven track record with 25 years in business and banking. His experience includes managing teams of over 2,000 people and annual revenues exceeding AUD $2 billion. Mr. Listorti has held board positions in industry bodies and joint venture partnerships.

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