Credits from Sequestration Activities
Here, carbon credits represent the amount of carbon
stored in a tree. It is measured in metric tons. Carbon dioxide (CO2)
is absorbed (sequestered) by the tree from the air during photosynthesis. The
carbon, or C part, is used by the tree as a building block in it's cellular
structure. The oxygen, or O2 part, is respired as
a waste product.
A hectare of forest with a sequestration rate of 6 ton per hectare per year that
matures at year 70, yields a total of 420 tons of carbon. The land owner agrees
to guidelines set aside for carbon sinks, the ICBE or another provider produces
a piece of paper that represents the total yield in the form of a credit, and
arranges to sell it to an industry, municipality, state or national government.
The purchaser of the credit adds the amount of (stored) carbon represented by
the credit to the total amount of (emitted) carbon produced that year. This may
enable the purchaser to remain within the limits of a production cap, or to
eliminate a tax otherwise levied on the amount produced beyond that cap.
The ICBE logs the carbon assets and credits written against them in a
transparent, web-accessible database, and reports trading activities to domestic
and international authorities. Meanwhile, reduction schedules and free market
trading determine the dollar value of a ton of sequestered carbon.