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52 The Carbon Market: A Primer for Airports
Similar considerations should be made with offset credits. Offset credits represent one tonne
of CO2e avoided. If an airport sponsors an offset project to lower their own carbon footprint,
they must retain and retire that offset credit. Selling the offset credit gives credit from the reduc-
tion achieved by the project to the purchaser of the offset credit.
6.2 Overview of Carbon and Environmental
Instrument Trading
Key Takeaways for Airports
· Airport owners and managers need to identify potential avenues for selling their
offset credits and RECs.
· Entering into a bilateral contract with a REC or offset credit purchaser can provide
an airport with a fixed or guaranteed revenue stream.
If the decision is made to sell environmental credits associated with a project, several options
exist for doing so. The prominent methods to trade environmental instruments are:
· Exchanges,
· Wholesale brokers,
· Retail brokers, and
· Bi-lateral transactions.
The optimal means to transact the environmental credits will largely hinge on (1) the total vol-
ume of credits to be sold, (2) the type of environmental instrument (i.e., offset credit, REC, white
tag, etc.) and (3) the presence or absence of a known buyer (typically called an "off taker"). There is
no minimum transaction volume per se, but the economic benefits of monetizing should be
weighed against transaction costs. Table 11 presents a summary of the applicability of different paths
to sell environmental instruments. This table should be interpreted as "rules of thumb," noting that
every project has unique characteristics that may not directly align with these recommendations.
Table 11. Best uses of environmental instrument transaction methods.
Transaction
Best Use Pros Cons
Method
Exchange Large transaction volumes of Low per unit cost Does not support volumes
commonly traded to transact for less than 1,000 carbon
instruments (greater than large volumes, offset credits or 100 RECs
1,000 carbon offset credits or efficient
100 RECs)
Wholesale Moderate to large volumes of Customized Not an option for small
Broker a wide variety of transaction volumes (less than 1,000
environmental instruments support at carbon offset credits or
moderate cost RECs)
Retail Small volumes (less than Option for small Costly on a "per unit" basis
Broker 1,000 carbon offset credits or volumes
RECs)
Bi-lateral Off taker pre-defined, any No transaction May need outside
(direct) volume or instrument fees guidance for off taker
identification and contract
execution
