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  • Pedro Barros

Carbon Credits in the Voluntary Market: Beyond Appearances

In the Brazilian context of the voluntary carbon credit market, a popular saying becomes particularly relevant: "not all that glitters is gold." There is a significant growth of projects classified as carbon credits, whose substance and effectiveness in compensating for or removing CO2 from the atmosphere often do not meet initial expectations. This proliferation ranges from environmental preservation to the implementation of satellite analysis technologies, suggesting a diversity that, in many cases, does not translate into quality, effectiveness, or even the generation of actual carbon credits.


Challenges in Carbon Credit Validation


The market reality reveals projects lacking adequate safety mechanisms, guarantee funds to cover the risks of carbon reversal back into the atmosphere, methodologies validated through public consultation, professionals specialized in project development, independent audits, and certifying entities that closely monitor the credit generation process, with active supervision of the entire certification process.


The practice of companies or organizations self-titled "carbon certifiers" taking full responsibility for providing services within the certification process or part of it results in an evident conflict of interest, harming the transparency and reliability of the market, both Brazilian and international.


Blockchain: Innovation or Illusion?


The application of blockchain technology, while presented as a modern solution for carbon credit certification, often fails due to the lack of adoption of standardized procedures and alignment with globally accepted practices. This strategy, despite seeming advanced, frequently fails to provide the necessary validation and reliability, exemplifying how appearances can be deceptive in evaluating the validity of carbon reduction or capture initiatives.


At Lux Carbon Standard, tokens are generated upon the certification of credits; however, beyond each token representing a registered credit; at LuxCS, each one mirrors and records all stages of a project. This increases the transparency and integrity of the credits generated within the Triple C standard.


Criteria for the Legitimacy of Carbon Credits


It is imperative to distinguish between projects that merely present themselves as credits and those that effectively meet the fundamental criteria for their Validation and Verification. An authentic carbon credit in the voluntary market must be supported by solid safeguards, validated methodologies, qualified teams, independent audits, and certification conducted by recognized entities that follow internationally recognized best practices.


The Importance of a Careful Evaluation


A superficial analysis of the entire process for generating a carbon credit as a financial asset obscures the real essence of initiatives in the voluntary market. Thus, a careful and critical approach in evaluating these projects becomes crucial, ensuring that only those meeting the highest standards of integrity are recognized as tradable financial assets. Through meticulous scrutiny, we can ensure that efforts to offset greenhouse gas emissions and remove CO2 are truly effective and contribute significantly to the sustainability of our planet and be one of the most effective tools to combat the looming climate emergency.

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