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24 The Carbon Market: A Primer for Airports The voluntary carbon market is composed of (1) Buyers--generally entities that are not re- quired by law to make GHG reductions but wish to purchase offset credits to "offset" an emitting activity; and (2) Sellers--entities that reduce GHG emissions directly and wish to sell the benefits of that reduction. Airports that sponsor offset projects onsite will find offset credit buyers in the voluntary market driven primarily by the following two factors: 1. Purchasing offset credits that are expected to be used in a future compliance market, in advance of regulation, can be a strategy to mitigate future regulatory risk. However, there is some risk that the regulatory structure will not be implemented as expected, in which case the offset credits would likely have less value. 2. Entities may be interested in enhancing their brand and acting as environmental stewards by purchasing offset credits to claim a lower carbon footprint. Due to certain capital restrictions discussed previously in the Primer, airports sponsors are unlikely to be purchasers in the vol- untary carbon market for stewardship purposes. The following sections provide examples of programs and initiatives operating in the volun- tary carbon market. 2.2.1 Offset-Based Programs Key Takeaways for Airports Offset standards bodies establish criteria and protocols for developing, quantify- ing, and verifying GHG inventories. Each offset standards body has its own process for registering a project and issuing offset credits. While an offset credit can represent any reduction in GHG emissions, only some GHG reduc- tion activities are likely to create opportunities for additional revenue. In the United States' vol- untary market, offset standards bodies have specific project types and procedures that project developers can follow in order to originate an offset credit. The specific project-type rules are often called "offset protocols." Buyers in the voluntary market generally prefer to purchase an offset credit from one of these recognized and credible bodies to ensure the validity of the offset credit. Some offset projects, certified under one of the leading standards bodies, may provide project owners a fast track to being certified under a future regulatory program. The leading stan- dards bodies using industry accepted offset protocols include the following: The Verified Carbon Standard (VCS) is the most widely used quality assurance program to account for GHG reductions and credits in the voluntary carbon market worldwide. The pro- gram sets out processes for approving new project methodologies, approving independent auditing bodies, and issuing and listing GHG credits in a registry system. VCS-approved carbon offset credits are registered and traded as Verified Carbon Units (VCUs), with one VCU rep- resenting emission reductions of one metric tonne of carbon dioxide. The American Carbon Registry (ACR) is the first private voluntary GHG registry in the United States. ACR has numerous functions and responsibilities including extensive experi- ence in carbon offset issuance and development of carbon offset protocols as well as online transaction and retirement reporting. ACR has issued over 30 million offset credits and is one of the most widely used voluntary carbon market registries in the world. The Climate Action Reserve (CAR) is a national offsets program that is focused on the United States carbon market. CAR is known for establishing standards for quantifying and tracking GHG emissions reduction projects, providing oversight to third-party verification bodies, and tracking carbon credits called Climate Reserve Tonnes (CRTs).