Would you like to understand more about the carbon credit market? Check out our Q&A below:
What are carbon credits?
Carbon credits are digital certificates issued by companies and environmental projects which can be sold to individuals and companies that either need to or want to mitigate their Greenhouse Gas emissions.
The standard definition of a carbon credit is as follows:
1 carbon credit = 1 ton of CO2 emission that has been avoided at some point in the past
In other words, a carbon credit represents both:
1) An amount of carbon dioxide (CO2) that a company or individual commits to not release or has avoided the release into the atmosphere; and
2) An amount of CO2 emissions that has been avoided through environmental projects or sustainable activities.
Carbon credits can be transferred between counterparties, with the purchasing party obtaining the ability to use the carbon credits for compliance with mandatory or voluntary environmental programs.
How did carbon credits come about, and what are they for?
Carbon credits are a product of the 1997 Kyoto Protocol. The objective of the Kyoto Protocol at that time, as it is now, was to reduce the emission of greenhouse gases, which accelerate global warming. The initial reasoning behind the creation of carbon credits was straightforward: companies that have a very high level of emissions and are not able to reduce these emissions to meet the requirements of a voluntary or mandatory environmental program can buy carbon credits to offset their emissions. When these credits are purchased from organizations that emit less gas or from environmental projects, they indirectly help with this control and contribute to the development of communities that promote the protection of biodiversity.
What does "carbon footprint" mean?
The now universally used phrase “carbon footprint” is simply the amount of carbon and other polluting gases emitted when producing a product or performing a service. It has also come to stand for the emission of greenhouse gases by each person or company for their routine activities, like riding in a car, flying, using electricity, and so on. Almost all humans around the world leave our own carbon footprint.
When buying carbon credits, can I neutralize my carbon footprints on the spot?
Your choice: you can choose to retire your carbon credit on the spot, thus neutralizing your footprint, or you can carry credits to offset your CO2 emissions whenever you want.
What are the advantages of the carbon credit market for Amazon forest?
The carbon credits initiative values organizations that conserve and reforest the environment, which makes the carbon credit as a form of environmental protection even more advantageous. Of almost equal importance, the resources acquired for keeping the Amazon forest alive and standing means environmental organizations can improve the conditions of people in the communities, creating a positive impact on their lives and the region's GDP.
How are carbon credits generated?
There are several ways to generate carbon credits, including the following examples: (1) Conserving forest areas via sustainable economic activity, such as forestry instead of livestock; (2) Replacing a non-renewable energy source, such as fossil fuel, with a clean energy source; (3) Reforest a degraded area; and (4) Invest in environmental technologies.
How is the carbon credit calculated?
One ton of CO2 directly corresponds to a carbon credit. However, the reduction of other Greenhouse Gases can also be converted into credits, thus creating a Carbon Equivalent.
How much does each ton of carbon credit cost?
Carbon credits have a market value that fluctuates based upon extrinsic economic forces, including, but not limited to, supply and demand, environmental laws and regulations, inflation, and the type of project generating the carbon credit.
What is the relationship between CO2 and climate change?
According to NASA, 97% scientists around the world say that humans contribute to climate change. The global temperature has risen 1 degree Celsius since the Industrial Revolution, which spanned 250 years. If CO2 emissions do not fall, the global average temperature could rise another 3 to 4 degrees Celsius in just the next half-century.
What objectives established in the Paris Agreement are being fulfilled?
The central objective of the Paris Agreement is to maintain the increase in the average temperature of the Earth in the range of 1.5 ° C to 2 ° C above pre-industrial levels. Today, this goal still seems very distant, as the emissions of greenhouse gases continue to cause global warming. Of the current 55 billion tons of CO2 emitted, only 11 billion tons are being offset by companies (accounting for 99% of the offset) and individuals (accounting for merely 1% of all offsets).
What is the UN's position on the price of carbon credit?
According a recent IMF report, “a tax of $75 per ton of carbon dioxide applied around the world would make it possible to meet the Paris Agreement target of limiting global warming to 2˚C over preindustrial levels.” https://www.imf.org/external/pubs/ft/fandd/2019/12/pdf/fd1219.pdf
What is the carbon credit market, and how does it work?
The carbon credit market is a global market that encourages the reduction of greenhouse gas emissions. It operates in this manner: for every ton of CO2 that is not released into the atmosphere, companies participating in a voluntary or mandatory environmental program receive a credit, which can be negotiated directly with other companies. A company emitting more gases needs to buy carbon credits to offset its emissions. Conversely, a company that pollutes the least has credits to sell. Certified environmental projects also earn carbon credits which project developers can then sell to third parties, making these protection projects even more sustainable.
Who, exactly, sets the prices for carbon credit?
No person or organization establishes the price of carbon credits. The price of a carbon credit is determined independently by extrinsic economic forces, including, but not limited to, supply and demand, environmental laws and regulations, inflation, and the type of project generating the credit. There are various entities that report carbon credit price information.
Who can issue carbon credits, and how are they issued?
Carbon credits are issued by international environmental certification projects and institutions. The carbon credits available on the MOSS platform are issued by Verra, a leading environmental certification organization based in Washington, D.C. Issuers of carbon credits are subjected to demanding validation procedures, which attest to the methodologies for calculating and implementing their activities with a positive environmental impact.
Why is the Brazilian carbon credit market unique?
Brazil has the unique advantage of having, in addition to clean fuel options, 40% of the world's tropical forests — among them, the Amazon — which remove carbon. Most countries, which have neither fuel options or substantial forests, may need to buy carbon credits from Brazil. Today, Brazil certifies only 5 million credits a year, though it has the potential to certify an astounding 1.5 billion credits. Imagine what that would mean in the carbon credit market. The global manager Schoders estimates that the Brazilian GDP would grow 6% per year if the price of carbon credit in Brazil approaches just the value that is already applied in Europe. https://www.schroders.com/en/insights/economics/is-brazil-the-next-saudi-arabia/
Who can sell carbon credits in Brazil?
Carbon credits can be sold by companies, non-governmental organizations, institutions, or producers for environmental compensation. MOSS does not issue its own carbon credits but is proud to be a retailer of carbon credits.
Does buying carbon credits bring any risk?
Carbon credits are not investments or speculative assets, but rather consumptive instruments that can be used in connection with mandatory and voluntary environmental programs. You should carefully evaluate and research the risks associated with purchasing carbon credits before you make a purchase. Given the material characteristics of carbon credits and their association with a broad range of mandatory and voluntary environmental programs that are unaffiliated with MOSS, purchasers of carbon credits are exposed to numerous risks, which may cause the price of carbon credits to appreciate, depreciate, or remain the same depending on a variety of factors. These risks include, but are not limited to, regulatory and legislative risks, environmental program risks, cybersecurity risks, third-party certification risks, reputation risks due to any failure related to relevant project(s), fraud risks, and market manipulation risks. The risk of loss in trading or holding carbon credits can be substantial.
Do I need to pay taxes on purchases of carbon credit?
Depending on your jurisdiction, taxes may apply to your purchases of carbon credits. Please consult with a tax advisor to determine your tax obligations.
Is trading in carbon credits regulated?
The CO2 Tokens are tokenized carbon credits that are part of a voluntary program and thus the terms of the voluntary program will govern the environmental standards. In any event, potential regulation may vary depending upon seller’s and purchaser’s jurisdictions. For example, carbon credits are considered intangible commodities in the United States and the U.S. Commodity Futures Trading Commission (“CFTC”) has anti-fraud and anti-manipulation jurisdiction over carbon credit spot markets as well as exclusive and comprehensive regulatory jurisdiction over the trading of derivatives with carbon credits as the underlying commodity. Particular U.S. states may also have laws applicable to transactions involving carbon credits. Please consult a lawyer or professional advisor in your jurisdiction to determine whether you are subject to any regulatory requirements in connection with your carbon credit purchases and sales, such as reporting or environmental requirements.
What are the risks of purchasing or holding CO2 Tokens?
There are many risks associated with purchasing or holding CO2 Tokens that are unique to CO2 Tokens relative to other carbon credits because CO2 Tokens are ERC20 digital assets issued on the Ethereum blockchain. You should consider carefully the risks described on our risk disclosures page (https://moss.earth/privacy) before purchasing or using CO2 Tokens.
Who issues CO2 Tokens?
CO2 Tokens are issued by MOSS CO2 Capital LLC, a Cayman Islands limited company.
Are CO2 Token transactions regulated?
Potential regulation may vary depending upon seller’s and purchaser’s jurisdictions. For example, CO2 Tokens are intangible commodities under the Commodity Exchange Act and regulations promulgated thereunder by the CFTC. While the CFTC has the authority to police commodity spot markets for fraud and manipulation, it does not otherwise regulate the spot markets. However, the CFTC has exclusive and comprehensive regulatory jurisdiction over the trading of derivatives with CO2 Tokens as the underlying commodity. Particular U.S. states may also have laws applicable to transactions involving commodities. Please consult a lawyer or professional advisor in your jurisdiction to determine whether you are subject to any regulatory requirements in connection with your CO2 Token purchases and sales, such as reporting or environmental requirements.
How is the price of a CO2 Token determined?
As each CO2 Token represents ownership of a verified carbon unit, or VCU, registered on the Verra Registry, the value of each CO2 Token relates directly to the value of a VCU, and fluctuations in the price of VCUs will materially affect the price of CO2 Tokens. Additionally, general blockchain and digital asset market trends may affect the price of CO2 Tokens because CO2 Tokens are generated and maintained on the Ethereum blockchain. See also “What are the risks of purchasing or holding CO2 Tokens?” below.
What is a CO2 Token?
CO2 Tokens are “tokenized” carbon credits issued by MOSS. Each CO2 Token is an ERC20 digital asset issued on the Ethereum blockchain that represents ownership of a carbon credit. The type of carbon credit will typically be a verified carbon unit, or VCU, that is registered on the Verra Registry (www.verra.org). However, MOSS may, from time to time, in its sole and absolute discretion, substitute or re-allocate the type of carbon credits associated with a CO2 Token from time to time, provided that the total tons of carbon emissions represented by each type of carbon credit will be equivalent. You can use CO2 Tokens as carbon credits in connection with mandatory and voluntary environmental program requirements. CO2 Tokens are not designed or sold as securities or any other form of investment product.
How do I hold CO2 Tokens?
You must establish an Ethereum blockchain digital wallet that supports ERC20 digital assets in order to maintain custody of the CO2 Tokens that you purchase or receive. You may do so through third-party vendor Uphold, subject to Uphold’s separate terms and conditions. You are responsible for reviewing Uphold’s terms and conditions carefully as your digital wallet is subject to those terms and not MOSS’s Terms of Service. Uphold’s terms and conditions are available at https://uphold.com/en/legal/membership-agreement/general
Can I transfer and retire CO2 Tokens like other carbon credits?
CO2 Tokens are ERC20 digital assets that may be freely transferred from your Ethereum blockchain digital wallet to any other Ethereum blockchain digital wallet. When you transfer a CO2 Token to a third party, the transfer of the CO2 Token constitutes a transfer of title of the associated verified carbon credit to such third party. You may retire the verified carbon unit(s) associated with your CO2 Token(s) by transferring the CO2 Token(s) to the retirement address on the Ethereum blockchain specified here (https://co2certification.moss.earth). After you send your CO2 Token(s) to the retirement address, the CO2 Token(s) will immediately become unusable and the associated verified carbon units will be retired within 30 days.
Can I purchase a fraction of a CO2 Token?
Yes, each CO2 Token is sub-divisible to the th decimal point. You can retire a portion of a CO2 Token by sending that portion to the retirement address on the Ethereum blockchain specified here 0xfc98e825a2264d890f9a1e68ed50e1526abccacd
Can I redeem my CO2 Tokens for the associated verified carbon units?
Yes, you may “de-tokenize” your CO2 Tokens and take possession of the associated verified carbon credits in accordance with MOSS’s Terms of Service by following the instructions set forth by MOSS (https://co2certification.moss.earth). However, CO2 Tokens do not provide for future delivery of verified carbon units on any set date or upon the occurrence or non-occurrence of any event.
What is MOSS's belief?
We believe that climate change control can go through the carbon credit market to reach everyone, and help be a positive factor in controlling climate change. And we believe strongly that every individual has the right to participate in this important market.
What is MOSS's mission?
Our mission is as bold as it is necessary: accelerate a sustainable future. And we are doing this by creating a real, reliable, accessible, and profitable way to change the global warming scenario, preserving forests and contributing to the country's development. Today alone, about 1 million football fields in the Amazon forest are protected by MOSS partner environmental projects. And we have just begun — so imagine tomorrow.
What is the MOSS business model?
MOSS buys carbon credits from selected and certified environmental projects in Brazil, which prevent CO2 emissions or captures them from the atmosphere.MOSS offers two services: You can purchase carbon credits directly from MOSS on its 100% digital platform, www.MOSS.earth, and carry them in a digital wallet for future compensation if you do not with to compensate immediately. Also, you can neutralize and compensate your emissions at any time.
What does MOSS mean?
MOSS is a very appropriate namesake for our company. MOSS is a plant that acts as a natural air filter, absorbing toxins from the environment. Its wide presence and proliferation indicates that the area has a low level of pollution, which is our company’s mission.
Who is MOSS?
MOSS is the world's first and only environmental fintech to purchase and sell carbon credits to individuals. The pioneering initiative unites environmental awareness and finance to contribute to changing the scenario of global warming, preserving our forests, developing the country's economy, and democratizing the purchase and sale of carbon credits for Brazilians. MOSS does not provide tax, investment, or legal advice or advisory services, and no one associated with MOSS is authorized to provide any such advice or services.
What are the advantages of purchasing carbon credits on MOSS?
There are many, starting with the fact that MOSS, and only MOSS, has a master account in the global registry, which allows it to open individual accounts. That is, each credit buyer has his or her report and tracks his or her credit status online. Also, MOSS deals with a digital and dollar asset, with a globally recognized value that does not expire. And MOSS typically sells carbon credits at prices that are lower than on other venues.** ALTHOUGH MOSS DELIVERS COMPETITIVE PRICING, IT DOES NOT GUARANTEE THAT OTHER VENDORS WILL NOT SELL CARBON CREDITS AT LOWER PRICES. THE PRICE OF CARBON CREDITS WILL FLUCTUATE BASED ON MARKET ACTIVITY.
If a company wants to buy credits on a larger scale, does MOSS also negotiate?
Yes, MOSS sells carbon credits in larger quantities at negotiated rates. Please contact MOSS to learn more.
How do I know that my carbon credits are not being resold to others?
Credits traded on MOSS are validated, monitored, and certified following a global protocol called VCS (Verified Carbon Standard). Each MOSS credit has a serial number and can be monitored using. Furthermore, MOSS also encrypts its blockchain credits, which makes them more secure.
Are there positive environmental numbers and results already obtained by MOSS?
Yes, and we are pleased to share them. MOSS helped sell more than 800,000 tons of carbon credits (US$ 10 million) in just over six months of operation, becoming the largest buyer in the Brazilian market in this sector since it was launched.
Why did MOSS choose the Amazon forest to be benefited?
We didn’t choose the Amazon as much as the urgency of the environmental crisis chose it for us. The Amazon is by far our most precious natural asset and it needs to be protected, especially at a time of increasing deforestation. Additionally, the Amazon has enormous potential for the carbon credit market: Brazil has 40% of the planet's tropical forests, but also has the planet’s cheapest carbon credit. We need to equalize this and generate more investment for environmental projects — but just as important, we can do this.
When I buy carbon credits, in a way, am I "buying" a part of the Amazon forest?
No, not at all. Carbon credits do not represent physical assets, such as parts of the forest, properties or trees. A carbon credit is an intangible asset. But you are providing resources for certified environmental projects to keep the forest alive and standing.
What do the environmental projects that issue credits in the Amazon forest do?
The existence of these projects bring about positive environmental, social, and economic impacts for the region: ENVIRONMENTAL: Just as protecting against deforestation, the projects represent an extremely crucial action against climate change, while helping to preserve the fauna and water wealth of the Amazon. For example, since its inception in 2014, Agrocortex, one of our partner projects in the Amazon, has prevented deforestation of an area equivalent to more than 3,000 football fields in Floresta. And Fazer do Ituxi protects an area of 150,000 hectares. SOCIAL: These projects invest in the vital construction of schools, hospitals, and activities for the well-being and development of local communities. ECONOMIC: Agrocortex is the largest employer in Acre, while Ituxi Farm helps the local community that depends on the forest for their livelihood of collecting açaí and chestnuts.
How many partner projects does MOSS have? And how were they selected?
MOSS currently has six partner projects: Ituxi, Agrocortex, Madre de Dios, Brazil Nuts, Amazon Rio IFM, BiofilicaAll projects undergo rigorous selection processes before being certified.International environmental certification projects and institutions only issue carbon credits. They are subjected to demanding validation procedures that attest to the methodologies used to calculate and implement their activities with positive environmental impact. All projects already certified are listed on the Ekos Platform (a non-profit foundation that curates the best carbon projects in Brazil). MOSS, which is on the Ekos Platform, selects the partners it considers the best among those working in the Amazon forest.
Are certificates not canceled as soon as they are used?
Credits can be canceled/used by buyers at any time to compensate for their pollution. The holder can choose to keep the credits for as long as he or she wishes, or the holder can decide to use them immediately and at any time. The project had already benefited from funds when the credits were initially sold.
We have a large number of CERs for sale that does not belong to forestry projects. Does it matter to MOSS?
MOSS is currently focusing on another certification, but finds CERs for B2B interesting and would like to stay in touch for future opportunities.
How soon do I receive my credits after purchasing?
After payment confirmation, MOSS will send the credits to your wallet on our platform within three business days.
Where are credits certified, and where are they backed?
All MOSS credits follow international standards for monitoring, validation, certification and registration. All MOSS credits follow international standards for monitoring, validation, certification and registration.Four steps guarantee the validity of our credits: Step 1 - MOSS trades only carbon assets that have gone through validation and certification processes according to international certification standards and audited by independent institutions. Step 2 - The certification and registration of the assets are done according to a respected global certification standard. Step 3 The only assets traded are ones resulting from projects that, in addition to being certified by a global certification standard, have been validated by the Ekos platform. Step 4 – And, finally, carbon assets are also analyzed by the MOSS team.
Is there a brokerage fee?
The moss.earth platform is a marketplace, that is, a virtual mall for sellers and buyers to carry out their transactions. Thus, on purchases made on our marketplace, there may be a transaction fee, both from the seller and the buyer, for using the platform's services.
What proportion of the credits go to the projects?
All of the resources do because the carbon credits we transact have already been fully acquired from the projects. This means 100% of the resources for the original acquisition have already been paid directly to forestry projects in the Amazon forest.