Carbon credits have become a vital tool in combating climate change, promoting corporate social responsibility, and ultimately achieving net-zero. While large corporations can afford to invest in high-tech, expensive carbon offset projects, SMEs and individuals are typically more budget constrained and are looking to purchase more affordable carbon credits.
In this article, we will offer practical guide on selecting the best affordable carbon offsets and highlight 8 cost-effective yet impactful carbon credit projects in 2024. Handpicked by us, these 8 projects cover 4 main carbon credit categories: Technology-Based, Nature-Based, Energy-Based, and Household Solutions.
1. Affordable Technology-Based Carbon Credits
Technology-based carbon credits involve projects that utilize advanced technologies to reduce or remove carbon emissions. These projects often include cutting-edge innovations like direct air capture (DAC) or biochar. However, given these technologies are at an early stage of development, they are often costly with average price exceeding US$100 per ton (ie per credit).
Still, there are high-quality, affordable options available that make use of innovative technology. For instance, projects that upgrade existing infrastructure to be more energy-efficient can provide significant carbon savings at a lower cost.
Another example is methane capture from landfills, where the captured methane is used to generate electricity, reducing greenhouse gas emissions and providing a renewable energy source.
These projects not only reduce emissions but also often include additional benefits such as job creation and improved local air quality. By investing in these types of technology-based carbon credits, you can support innovative solutions to climate change that are both effective and economical.
Recommended Technology-Based Carbon Credits
- Project 1: Transforming Waste Into Soil Health
- Project 2: Biofuel Wastewater Solution in Cambodia
Project details shown below.
2. Affordable Nature-Based Carbon Credits
Nature-based carbon credits focus on projects like reforestation, forest conservation, and sustainable land management. These projects offer significant ecological benefits by restoring natural habitats, increasing biodiversity, and enhancing ecosystem services such as water purification and soil stabilization.
Additionally, they provide social benefits by supporting local communities through job creation, sustainable agriculture practices, and the protection of traditional livelihoods.
By investing in nature-based carbon credits, you contribute to the preservation of natural landscapes and the improvement of local economies and community well-being.
Recommended Nature-Based Carbon Credits
- Project 1: Biodiverse Forests in Panama
- Project 2: Reforesting Columbia
Project details shown below.
3. Affordable Energy Carbon Credits
Energy carbon credits involve projects that reduce emissions by generating renewable energy from sources such as wind, solar, hydro, and geothermal. These projects replace or reduce the need for fossil fuels, which are significant contributors to greenhouse gas emissions. By harnessing renewable resources, these initiatives help to decrease the carbon intensity of the energy sector.
Renewable energy projects not only reduce carbon emissions but also provide additional benefits. They contribute to energy security by diversifying the energy supply and reducing dependence on imported fossil fuels. This, in turn, can stabilize energy prices and promote economic resilience. Moreover, renewable energy projects often create jobs in the construction, operation, and maintenance of renewable energy facilities, boosting local economies.
Recommended Energy-Based Carbon Credits
- Project 1: Mongolia’s Wind Farm
- Project 2: Sustainable Biofuels in Spain
Project details shown below.
4. Affordable Household Solutions Carbon Credits
Household solutions offset credits involve projects that focus on improving energy efficiency and reducing emissions directly within homes.
These projects typically include initiatives such as the distribution of energy-efficient cookstoves, improved home insulation, and efficient lighting solutions. By making homes more energy-efficient, these projects help reduce the reliance on traditional, carbon-intensive energy sources such as wood, charcoal, and kerosene.
Household carbon credits offer several co-benefits beyond reducing emissions. These projects can significantly improve indoor air quality, leading to better health outcomes for families, especially women and children who are often most affected by indoor pollution. By reducing reliance on traditional fuels like wood and charcoal, household solutions also lessen the environmental impact of deforestation and decrease household energy cost.
Recommended Household Solutions Carbon Credits
- Project 1: Fuel Efficient Stoves for Myanmar
- Project 2: Clean Cooking for Rural Zambia
Project details shown below.
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Transforming Waste into Soil Health
Project Description
The Okhla Compost Plant processes over 200 tons of waste daily, converting it into compost used by local farmers. This initiative is part of Delhi's Integrated Scientific Waste Management Scheme. By reducing reliance on chemical fertilizers, the project improves soil health and mitigates methane emissions from dumpsites, contributing to cleaner air in Delhi.
Price per tCO2
$5.00
Verification
CDM
Vintage
2013
Pros
- Environmental Benefits: Reduces methane emissions and pollution at scale
- Agricultural Benefits: Improves soil health and agricultural productivity
- Community Impact: Creates job opportunities and improves local health conditions
Cons
- Operational Challenges: Managing a large-scale composting facility involve significant operational procedures and regular maintenance. Any lapse can lead to the reduced performance of the project.
Why we like it
This project addresses significant environmental and social challenges in Delhi, offering a sustainable waste management solution with multiple co-benefits.
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Biofuel Wastewater Solution in Cambodia
Project Description
This project involves installing an anaerobic digestion system to treat wastewater from an ethanol plant, capturing methane for steam generation and displacing fossil fuels. It reduces methane emissions and fossil fuel consumption, providing economic benefits and environmental protection.
Price per tCO2
$15.00
Verification
CDM
Vintage
2013
Pros
- Environmental Impact: Reduces methane emissions and air pollution
- Economic Benefits: Given that Cambodia imports almost all its fossil fuels, this project helps promote energy independence and boosts the nation's economy
- Job Creation: Creates jobs and enhances local expertise
Cons
- Operational Complexity: The project is complexity and requires specialized knowledge and skills for effective operation and maintenance.
- Technical Risks: Potential technical issues such as equipment breakdown can disrupt methane recovery and wastewater treatment processes.
Why we like it
The project not only reduces emissions but also supports Cambodia's economy and technological advancement.
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Biodiverse Forests in Panama
Project Description
This project focuses on sustainable timber production while reforesting degraded pasture land with native tree species and teak. This initiative creates natural habitats, protects the soil, saves water, and mitigates climate change.
Price per tCO2
$38.00
Verification
Gold Standard
Vintage
2017
Pros
- Biodiversity Enhancement: Uses a mix of native tree species and teak, which supports local wildlife and increases biodiversity
- Local Employment: Provides long-term employment opportunities for the local communities
- Community Welfare: Improves the standard of living and educational support for local communities
- Habitat Protection: Protects endangered species and habitats
Cons
- Cost: Higher investment required due to project's extensive scope and benefits
Why we like it
This project combines biodiversity protection with sustainable timber production, providing significant environmental and social benefits.
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Reforesting Columbia
Project Description
This project aims to create near-natural forests in Colombia, producing high-quality hardwoods and sequestering carbon while restoring degraded areas. It contributes to responsible consumption and sustainable forest management.
Price per tCO2
€17.59
Verification
Gold Standard
Vintage
2018
Pros
- Sustainable Management: Promotes responsible consumption and sustainable forest management
- Biodiversity: Enhances biodiversity and ecological stability
- Restoration of Degraded Lands: Restores degraded areas, enhancing the ecological health of the region
- Economic Opportunities: Provides economic opportunities for local communities
Cons
- Climate Change Risk: The project is vulnerable to climate risks such as extreme weather events (eg. drought, forest fires and storms)
Why we like it
This project focuses on sustainable hardwood production, ecological restoration, and carbon sequestration. It integrates economic, social, and environmental benefits, contributing to multiple Sustainable Development Goals set by the United Nations.
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Mongolia's Wind Farm
Project Description
Mongolia's first grid-connected wind farm generates renewable electricity, reducing reliance on fossil fuels and cutting CO2 emissions significantly.
Price per tCO2
$2.23
Verification
CDM
Vintage
2013
Pros
- Clean Energy: Provides clean energy and reduces greenhouse gas (GHG) emissions
- Sector Growth: Stimulates the growth of the renewable energy sector in Mongolia
- Local Employment: Creates local employment opportunities and builds expertise in renewable energy technologies
Cons
- Noise Impact: Wind farms can generate noise, potentially affecting the nearby local communities
Why we like it
This project supports Mongolia's transition to renewable energy, offering economic and environmental benefits at a low cost.
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Sustainable Biofuels in Spain
Project Description
Biotrading 2007 S.L. manufactures and markets biofuels, reducing reliance on fossil fuels and cutting GHG emissions. This project promotes the use of renewable energy sources and supports sustainable industrial practices.
Price per tCO2
€12.50
Verification
ICR
Vintage
2022
Pros
- Renewable Energy: Promotes the use of renewable energy sources and reduces reliance on fossil fuels
- Sustainable Practices: Supports sustainable industrial practices and minimizes environmental impact
- Economic Stability: Contributes to energy independence and economic stability by fostering a resilient energy infrastructure
Cons
- Technical Challenges: Implementing and maintaining biofuel production processes can be complex and require specialized knowledge, skills, and ongoing maitenance.
Why we like it
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Fuel Efficient Stoves for Myanmar
Project Description
The Myanmar Stoves Campaign provides fuel-efficient stoves to rural households, reducing wood consumption, air pollution, and carbon emissions. This project has improved the lives of over 250,000 people in Myanmar.
Price per tCO2
$18.00
Verification
Gold Standard
Vintage
2020
Pros
- Environmental Protection: Reduces deforestation and indoor air pollution
- Cost Savings: Lowers household energy costs
- Health and Safety: Improves health and safety for communities
Cons
- Climate Impact Precision: The effectiveness of efficient cookstoves in reducing carbon emissions can be difficult to verify and some benefits may be overstated
Why we like it
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Clean Cooking for Rural Zambia
Project Description
This project distributes improved cookstoves in rural Zambia, reducing fuel use, emissions, and health risks associated with traditional cooking methods. It has distributed over 145,000 stoves and reduced CO2 emissions by over 750,000 metric tons to date.
Price per tCO2
$15.00
Verification
Gold Standard
Vintage
2022
Pros
- Environmental Impact: Reduces CO2 emissions and fuel consumption
- Women's Health and Economy: Improves health and economic conditions for women
- Community Development: Supports local employment and skills development
Cons
- Maintenance Challenges: Ongoing maintenance and repairs of stoves may be challenging in remote areas.
- Verification Complexity: Monitoring and verifying the actual use and impact of the stoves can be resource-intensive.
Why we like it
This project offers significant social, environmental, and economic benefits, making it a valuable investment for carbon offsetting. Additionally, with recent vintages from 2022 and 2023, the project ensures current relevance and impact, making it a reliable choice for sustainable development.
Case Study: Legacy Vacation Resorts' Commitment to Carbon Offsetting
U.S.-based hospitality company Legacy Vacation Resorts has demonstrated a strong commitment to sustainability by investing in carbon credits. This initiative is part of their broader strategy to achieve net-zero emissions and mitigate their environmental impact.
Since 2019, the company has been actively purchasing carbon credits to offset their carbon footprint, reaching carbon neutrality by offsetting 100% of guest stays and activities.
Legacy Vacation Resorts complies with the Science Based Targets Initiative (SBTi) to ensure that the carbon credits they purchase come from high-quality, verified projects.
In an interview for SME Climate Hub, Jared Meyers, chairman of Legacy Vacation Resorts, says that SMEs can play an important role in tackling climate change. According to him, “Small businesses can and should chart a path toward net zero, and they should do so transparently, publicly, and in accordance with Science Based Targets. This will help their positive actions spread and add to the momentum.”
In addition to investing in carbon credits, Legacy Vacation Resorts also implements other sustainability measures, including the installation of solar panels and comprehensive recycling programs.
5 Tips on Selecting the Best Affordable Carbon Credits
If you are interested in exploring additional affordable carbon credits beyond the projects highlighted in this article, it is crucial to understand the criteria that distinguish highly impactful projects from lower quality ones.
Selecting the right carbon credits project is key to ensuring that your investment is both cost-effective and meaningful. Here we list 5 key factors to consider when choosing the best affordable carbon offset projects to maximize your environmental and social impact.
1. They are Verified by Reputable Registries
Ensure that the carbon projects are verified by leading registries such as Gold Standard or Verra. Verification by reputable organizations ensures that the projects meet high standards of effectiveness, transparency, and accountability. This gives you confidence that the carbon credits you purchase are making a real and measurable impact.
2. They Offer Durable Solutions to Carbon Reduction
It is essential to invest in projects that provide "permanent" or long term solutions to carbon reduction. These projects ensure that the carbon emissions are effectively captured, rather than temporarily avoided. Permanent solutions contribute to lasting climate impact and provide more reliable outcomes for carbon offsetting.
3. They Are Removal Credits
Aim for removal credits whenever possible. These credits are typically better than avoidance credits as they are actually taking the existing carbon dioxide (or equivalent) out from the atmosphere. Science has showed us that we need removal credits to achieve net-zero. (For more information on what are removal vs avoidance projects, please see here)
4. They Have Recent Vintages
Opt for projects with recent vintages to ensure their current relevance and impact. A recent vintage for carbon credits typically refers to credits issued within the last 1-5 years. Recent vintages indicate that the projects are up-to-date and actively contributing to carbon reduction efforts. Investing in newer projects helps ensure that your carbon credits are aligned with the latest climate science and sustainability practices.
5. They Bring Co-Benefits
Choose projects that offer co-benefits alongside carbon reduction. These co-benefits can include social, economic, healthy improvements. For example, some projects may create local jobs, support community development, improve health outcomes by reducing air pollution, or enhance biodiversity.
By selecting projects with multiple co-benefits, you ensure that your investment not only addresses climate change but also contributes to the well-being of communities and ecosystems.
The Benefits of Acquiring Carbon Credits
Carbon credits create an avenue for businesses to tackle climate change by contributing to projects that reduces greenhouse gas emissions. In addition, these credits allows business to offset their residual, unavoidable emissions and achieve net zero.
Large corporations (such as Google, Microsoft, JP Morgan) are already heavily investing in carbon credit projects. SMEs should also take advantage of this opportunity, and invest in carbon credits to accelerate environmental protection as well as boost your company's reputation.
Here are some key benefits of purchasing carbon credits for SMEs
- Environmental Impact: Offsetting your carbon emissions helps combat climate change and supports projects that promote sustainability.
- Brand Reputation: Demonstrating a commitment to sustainability can enhance your brand's reputation, attract environmentally-conscious customers, and differentiate you from competitors.
- Regulatory Compliance: As environmental regulations become stricter, purchasing carbon credits can help you stay compliant with current and future regulations and avoid potential fines or penalties.
- Social Responsibility: Supporting carbon offset projects can bring a number of co-benefits in addition to reducing your carbon footprint. This includes community development, health improvements, and job creation in underserved regions.
- Financial Health: As the market increasingly values sustainability, SMEs that do not invest in carbon credits will find it harder to secure investment or financing, which in turn hinders their growth potential. Investing in carbon offsets can also provide a buffer against future financial uncertainties related to climate change and environmental regulations.
Final Thoughts
Affordable carbon credits provide SMEs and individuals with a practical way to combat climate change and offset residual emissions to achieve net-zero. By selecting verified and impactful projects, you can make a significant difference in reducing carbon emissions and improving community well-being.
To learn more about affordable carbon credit projects, click here.