I- Background of Carbon Credits:
Carbon Credits have their origins in the Kyoto Protocol of 1997, where they were proposed as a mechanism to combat climate change. The primary focus was on preventing, capturing, or reducing Greenhouse Gas (GHG) emissions. This is achieved through the conservation or reforestation of long-term forests, equivalent to not emitting or capturing one metric ton of CO2 in the environment.
The initiative aimed at having companies, emitting GHGs, pursue two objectives: reducing or offsetting GHG emissions by acquiring certified credits that guarantee environmental mitigation.
Some of the benefits sought through credit emissions included funding these projects. For example, in the case of forests, promoting the conservation of existing ones or encouraging the use of land for planting new forests that capture CO2. For other projects, such as renewable energy generation or those focusing on waste collection and use, these credits provide financial support that can be attractive to developers, not only for income but also for other non-financial benefits in project development.
II- Current Mechanism of Carbon Credits:
In the Central American region, given the potential for renewable energy generation, many developers and operators have chosen to qualify their projects with various carbon credits. In recent years, driven by the goals set in the United Nations Sustainable Development Goals, many countries emitting GHGs have agreed to reduce them. During this time, they seek to offset emissions with green bonds.
Among the most recognized bonds are Renewable Energy Certificates (RECs). These certificates represent 1000 kilowatt-hours of energy generation from renewable sources, involving a registration and certification process. Developers can subsequently sell these bonds in different markets where needed to offset GHGs.
III. Incentives in the Central American Region:
Also, as part of the incentives for renewable energy projects in the Central American region, the following are noteworthy: Read more
