1 Introduction
You might recognise this scenario: You or your company come up with a clever plan that involves
social and environmental benefits. The idea might be to produce green energy, or pethaps to
protect tropical rainforest from deforestation. Your plan takes into account that all those involved
need to make a decent living. At che start you might need subsidies and grants, but you realise that
in the long run these will dry up and the project will need to be able to generate its own income
stream. Therefore you are likely to structure your project as a business that sels goods or services.
Chances are your biggest challenge will be to get the business model co break even oF make a small
profit. We all like prodacts that are environmentally friendly, but few consumers are willing to
pay substantially more for them. You need an additional source of revenue and you've heard that
carbon credits could be a way of making your business viable.
In the beginning you ate optimistic, because the general principle of carbon credits seems simple.
Your project reduces greenhouse gas emissions and you are issued credits for this, which you can
then sell to other polluters. However, after a closer look at the documentation you are left over-
helmed by all the complicated terminology and abstract explanations. Whereis all that practical
information you nced? For example, who buys these credits, and what prices can I expect for my.
credits? Certification seems important, but which of the many available standards should you
choose? Sure, some companies have offered their services to you, but they are very expensive, and
do I realy need them every step of the way?
Ifyou can relate to this scenario then this isthe book for you. In the following pages we aim to
provide a complete overview of what carbon credits are, where and how they are sold and certified,
prices and what influences them, how to calculate expected revenues and the different players in
the industry, all in a language that is understandable. There are also plenty of references to sources
for more specific and in-depth information. The book combines general explanations in the main
body of text with practical examples illustrated in boxed text
Because there are so many different types of projects that can generate carbon credits, itis vireually
impossible to cover all of those projects in detail. Our Focus is on the hurdles one can expect to
encounter when setting up a carbon credit generating project in a developing country context
Some extra attention has been paid to forestry, agroforestry and biofuel projects in developing
countries, because of the unique challenges they face and the limited experience that is available.
While broad in scope, this book may be of particular interest to those who are involved in the
production of biodiesel from Jatropha. ‘he gencsis of the book was research conducted for Mali
Biocarburant (see box 1), a biodiesel producer in West Africa that needed additional income to