Global Carbon Markets

The carbon market is a system for buying and selling carbon credits, which are instruments that allow companies, governments, and other organizations to address their greenhouse gas emissions by funding projects that reduce or remove carbon dioxide from the atmosphere.  This system helps offset a company's emissions until they are able to incorporate modern technologies that will eliminate emissions from their operations. 

Carbon credits play a crucial role in combating climate change since they provide a market-based mechanism and financial incentive for investors, organizations, or governments to invest in projects that reduce or remove emissions. 

Unlike nature carbon credits, such as forestry carbon credits which are presently going through an existential crisis, carbon credits derived from the plugging of oil and gas wells follow strict protocols in the measurement of emissions and the calculating of the reserves left in the ground.  These protocols have been developed by the Society of Petroleum Engineers, the American Association of Petroleum Geologist and the Society of Exploration Geophysicists.  They have been adopted by the Security and Exchange Commission for reservoir reports.  These protocols are called the Petroleum Resources Management System or PRMS, which outline how a reserve report is assembled to be legally acceptable to the SEC and investors of public companies.  The same PRMS protocols are being used by certain carbon registries dedicated to creating high-quality, transparent oil and gas based carbon credits, and they adhere to the principles of accuracy, permanence and transparancy.  The carbon credits generated by UCS are asset based using science and not best guess, as with nature credits.  

Carbon registries such as American Carbon Registry, CarbonPath, ZeroSix, and BCarbon have recently developed protocols for oil and gas-based carbon credits. Their protocols are based on years of research with a wide array of stakeholders to assure simplicity, reliability, accuracy, and scale. 

Oil and gas carbon credits are measurement-focused protocols and they provide a reliable manner of verifying and validating the reduction or elimination of emissions which can be continually accessed and reviewed. 

In the U.S. carbon offsets are voluntary. That said, the U.S. Securities and Exchange Commission has issued a recommendation that companies that have announced “net zero” goals must disclose how they intend to achieve their objective, and if they purchase carbon offsets, they must disclose them. The SEC guidelines have raised the bar for carbon offsets and increased the value of measurement and science-based protocols.