(RECs), but they are different types of products

Carbon Credits Renewable Energy Certificates (RECs)

What are they? A Carbon Credit represents one metric ton of
CO2e emissions avoided from an emission
reduction project.
A REC represents the renewable component
of one kilowatt hour (kWh) of electricity
generated from an acceptable or predefined
clean, renewable source. RECs do not
represent the electricity itself – the
electricity is considered a different product.

Where do they come from?
Carbon Credits can be from any registered RECs are from renewable electricity projects
emissions reduction projects, such as only.
emissions reduction at landfills,
reforestation or renewable electricity
projects.

What are they used for?
When you purchase a Carbon Credit, you can
offset your emissions not only generated
from electricity consumption, but also from
any other activities that generate emissions
such as air travel, commuting or events.
When you purchase a REC, you can claim the
renewable benefits for an equivalent amount
of your conventional electricity use.

What is the regulatory
arrangement?
Carbon Credits are issued by globally
recognized carbon credit registries, the most
well-known of which are the Clean
Development Mechanism (CDM) and the
Verified Carbon Standard (VCS). Carbon
Credits can be traded on either mandatory or
voluntary markets. For more information on
Carbon Credit registries and markets, please
refer to the FAQs below.
Rules and regulations for RECs vary by
region and country. They can be developed
and enforced by regional governments,
national governments or various regulatory
bodies, depending on the country and
jurisdiction.

What are carbon credit markets?

Carbon markets can be either mandatory or voluntary. The compliance carbon offset market is a legally-binding
mandatory emission trading scheme. Several regional and national schemes exist, the most well-known of which
is the EU ETS in Europe, established under the Kyoto Protocol linked to the United Nations Framework on Climate
Change (UNFCCC). If the customer is purchasing credits to satisfy the requirements of a compliance regime, the
rules relating to that specific compliance regime would apply. The customer would be responsible for ensuring
his/her purchase is in compliance with the regime that applies to his/her business or organisation.

The voluntary market operates outside the compliance market and enables companies and individuals to
purchase carbon credits on a voluntary basis to satisfy personal or corporate social responsibility objectives. If
the credit purchase is for voluntary purposes, there are no special rules relating to international transactions
beyond those which would apply for any other international transaction.
What types of carbon credits are there and what types does CLP have?
CER (Certified Emission Reductions)

CER is the name of the credit issued by the Clean Development Mechanism (CDM) and represents a reduction of
one metric ton of CO2e. The CDM was created by the Kyoto Protocol. It allows a developed country with an
emission-reduction or emission-limitation commitment under the Protocol to implement emission reduction
projects in a developing country. CDM provides a process for registering projects in developing countries and
issuing credits from those projects and are valid for use in the EU ETS and for Kyoto Protocol commitments.
Here is a link to the CDM registry . Since these credits are also generated through an internationally recognized
process, they are also sold in the voluntary carbon market because buyers trust their legitimacy.