If a business wants to make a positive impact on the world, addressing its environmental footprint operationally might not be enough. Even with the best intentions, running a business inevitably means consuming some resources that can’t simply be avoided.
For example, a coffee company might engage in regenerative farming to sequester more carbon than it emits and support healthy local ecosystems. But even with careful practices, it can’t avoid certain realities, like the shipping emissions from transporting beans to their customers.
Fortunately, there are several voluntary, market-based solutions that enable businesses to address residual environmental issues that can’t simply be cut. c
The most well-known mechanism is likely carbon credits. Also called carbon offsets, carbon credits direct financing toward environmental projects that avoid, reduce, or remove emissions, thereby helping a buyer balance its carbon footprint. And with high-quality credits, the funding typically supports projects that wouldn’t otherwise be possible without this extra revenue.
But carbon credits are just one of several types of environmental credits that direct financing toward projects that support the environment.
For one, carbon credits are often grouped under the umbrella term environmental attribute certificate (EAC), which includes other types of financing mechanisms, like energy-related certificates. By purchasing an EAC, the buyer generally gains the right to claim the environmental benefits associated with that certificate, like an emission reduction associated with funding renewable electricity.
Still, the same concept can apply to non-emissions areas. Buying plastic credits can fund the recovery or prevention of plastic waste, which a company might then claim helps balance the impact of the virgin plastic used in its products.
Depending on your operations and sustainability goals, different types of credits or certificates could be worth investing in.
Here, we’ll take a closer look at some of the most popular types of environmental credits.
Types of Environmental Credits
| Renewable Energy Certificates (RECs) | Environmental attributes of 1 MWh of renewable electricity | Claim renewable electricity use and support clean energy generation |
| Water Restoration Certificates (WRCs) | 1,000 gallons of freshwater restored or improved | Address water footprint by contributing to water restoration |
| Plastic Credits | ~1 metric ton of plastic collected or recycled (varies) | Counter plastic pollution when elimination isn’t yet possible |
| Biodiversity Credits | Conservation of ecosystems (units vary by issuer) | Protect biodiversity/conserve natural ecosystems |
| Sustainable Aviation Fuel certificates (SAFc) | Environmental attributes of 1 metric ton of sustainable aviation fuel | Claim low-carbon fuel and support sustainable fuel production |
| Renewable Thermal Certificates (RTCs) | Environmental attributes of 1 dekatherm of renewable thermal energy | Reduce emissions from hard-to-electrify fuels, e.g., replacing fossil fuel natural gas with renewable natural gas |
Carbon Credits
What they represent: One metric ton of carbon dioxide equivalent emissions avoided, reduced, or removed from the atmosphere.
Why they matter: Even when companies set ambitious emission reduction goals, they generally can’t cut to zero overnight. Carbon credits can help serve as a bridge to global net-zero, and they can continue to be used to offset residual emissions that are essentially impossible to avoid.
Carbon credits also tend to have a variety of co-benefits beyond emissions, like protecting valuable ecosystems or supporting health and economic opportunities in the local communities where these projects operate.
How they’re generated: Carbon credits can come from many different types of projects that have independent third-party verified emissions impact, such as reforestation, methane capture from landfills, and soil carbon sequestration, to name just a few.
Calculate your carbon footprint to get a better sense of the emissions you want to balance.
Renewable Energy Certificates (RECs)
What they represent: The environmental attributes associated with one megawatt-hour (MWh) of renewable electricity.
Why they matter: Buying a REC is essentially the same as buying renewable electricity. Power gets mixed from different sources within a grid, so it’s not always possible to know exactly who’s consuming what. But since that renewable electricity is definitively added into the mix, that means someone is now using renewable energy.
The REC simply gives you permission to claim that benefit for yourself, while generally avoiding the risk of double-counting. Meanwhile, by buying RECs, you’re supporting the financial viability of more clean energy projects.
How they’re generated: RECs can be generated when a renewable source of electricity gets verifiably added to a power grid. RECs can either be sold bundled or unbundled. With bundled RECs, the energy and environmental attributes are sold together, like if a solar farm directly sells its energy to a company and agrees not to sell the claim to those environmental attributes elsewhere. Unbundled RECs separate the environmental claims and the energy, making it possible to claim the use of renewable electricity while continuing to purchase from your local utility.
You can easily and affordably purchase Green-e certified RECs through Terrapass online.
Water Restoration Certificates (WRCs)
What they represent: One WRC corresponds to 1,000 gallons of natural freshwater improved or restored.
Why they matter: Many parts of the world are under significant water stress, which often stems from issues like commercial overuse and climate change. Buying WRCs can help counter this trend by supporting the health and volume of freshwater systems.
A business operating in water-stressed regions in the Western U.S., for example, may need to inevitably use some freshwater to produce its products. In that case, it can ideally fund WRC projects in that same water resource region, like ones that secure water rights to keep more water within rivers, aquifers, etc.
How they’re generated: While similar water-related credits may exist elsewhere, BEF WRCs™ are specifically issued by the Bonneville Environmental Foundation (BEF). BEF WRC™ projects can involve restoring flows through securing legal rights, restoring natural systems through physical interventions like removing dams, or improving water use efficiency. All projects are third-party verified, typically by Watercourse Engineering or the National Fish and Wildlife Foundation, and all are tracked on S&P Global’s Markit registry.
Support freshwater systems and their associated recreational and ecological benefits by buying WRCs through Terrapass today.
Plastic Credits
What they represent: Plastic credits aren’t quite as formalized as some of these other market-based instruments, so the details can vary by credit issuer. But one example is Verra’s Plastic Waste Reduction Program, where one plastic credit represents one metric ton of plastic that’s been collected or recycled.
Why they matter: Each year, approximately 19-23 million tons of plastic leak from land-based sources into water systems, according to the UN Environment Programme. Plastic pollution then poses many threats, such as to the health of marine animals, as well as overall human health.
Businesses can buy plastic credits to help counter plastic pollution, especially because plastic has become so ubiquitous that it’s not always possible to immediately remove plastic from your packaging or other parts of your supply chain.
How they’re generated: Generating these credits depends on the issuer. Some businesses, particularly consumer-facing ones, work with third-party organizations to make plastic-neutral claims. For one, ice pop company GoodPop launched a limited edition flavor that’s certified plastic neutral by 4Ocean. For this certification, 4Ocean removes plastic from water systems and coastlines equivalent to each pound of plastic used to produce that product or for the brand as a whole.
For Verra’s plastic credits, projects must meet the specific guidelines of its Plastic Waste Reduction Standard and accounting methodologies that help ensure each credit represents one metric ton of plastic collected or recycled. These projects are also third-party audited, as well as tracked on the Verra Registry, similar to carbon credits.
Biodiversity Credits
What they represent: Biodiversity credits are one of the least developed types of environmental credits, so there’s not a general consensus on what they represent. Different credit issuers have different standards.
For example, one of the pioneers in this space, Savimbo, sells biodiversity credits that represent one month of conservation for one hectare in a biodiversity hotspot. In contrast, another leader in this space, Terrasos, sells biodiversity credits that represent 10 m² (0.001 hectares) of protected ecosystems for 30 years.
Why they matter: Climate change and related issues like land use change are causing significant biodiversity loss. From 1970 to 2020, wildlife populations fell by 73%, according to WWF.
At a simple level, interfering with natural cycles of plant and animal life leads to species loss, which then creates more risks for humans, like faster temperature rise due to the loss of natural carbon sinks. There’s also many nuanced arguments for supporting biodiversity, such as the economic and health value of stable plant and animal life.
How they’re generated: Because these are less established, there’s not a standard way to generate biodiversity credits. But in general, these work like carbon credits, in the sense that an issuer works with project developers to ensure a given area of land is conserved in a way that protects biodiversity.
One voluntary group, the Biodiversity Credit Alliance (BCA), backed by organizations such as the UN Development Programme, is working on developing a framework for biodiversity credits that could help this market more closely resemble the voluntary carbon credit market.
Sustainable Aviation Fuel Certificates (SAFc)
What they represent: The environmental attributes associated with one metric ton of unblended sustainable aviation fuel (SAF).
Why they matter: Flying is a carbon-intensive activity, yet these can be some of the hardest emissions to avoid. A growing business, for example, may be able to address its direct energy use, but total emissions could still rise if employees fly to meet with customers and suppliers. Finding efficiencies like batching travel into longer trips or using online meetings when possible can help, but the reality is that many still value flying.
So, sustainable aviation fuel certificates (SAFc) provide buyers with a way to claim the use of this low-carbon fuel, rather than accounting for the normal emissions associated with traditional jet fuel. If you’re flying on a commercial airline, you don’t have direct control over their fuel usage, but by buying SAFc, you’re supporting the transition to lower-emission fuel sources.
How they’re generated: Unlike traditional jet fuel made from petroleum, SAF comes from alternative feedstocks like used cooking oils or agricultural waste. SAF then gets blended with traditional jet fuel, with commercial planes currently able to accommodate about 10-50% of the total volume from SAF, though testing of higher limits is underway.
Because of this blending, you can’t exactly say that your flight from New York to LA runs on SAF while a flight from New York to San Francisco runs on traditional jet fuel. But like with RECs, SAF certificates give you the ability to claim the environmental attributes of SAF. If you purchase enough certificates that correspond with your flight’s fuel usage, you could claim your portion of the flight fully used SAF from an emissions accounting perspective.
Buyers often use the book-and-claim approach for SAF certificates and other low-carbon fuel purchases. That means instead of taking physical possession of this fuel, you’re buying the certificates that represent a certain amount, and you then claim the corresponding environmental attributes.
Renewable Thermal Certificates (RTCs)
What they represent: The environmental attributes of 1 dekatherm (Dth) of renewable thermal energy, such as renewable natural gas or green hydrogen.
Why they matter: Not everything can be electrified to then run on renewable electricity, at least in the short term. Businesses often still have large scope 1 footprints from burning natural gas or using similar fuel sources.
So, using renewable thermal certificates (RTCs) provides buyers with a way to claim the environmental benefits of renewable thermal energy, like using renewable natural gas (RNG) to generate heat from a furnace, or using green hydrogen to power an industrial boiler. Like with RECs, RTCs enable buyers to make these claims without having to always physically procure the renewable energy, especially in cases where renewable and non-renewable fuels get mixed.
How they’re generated: RTCs are generated from projects that produce renewable thermal energy, like municipal waste facilities that capture methane from landfills and convert it into RNG. This works essentially the same as it does with RECs, where the RTCs can be either bundled with the underlying energy or sold unbundled on a book-and-claim basis.
Finding the Right Environmental Credits
Environmental issues are often deeply interconnected. Rising greenhouse gas emissions, for example, can increase global temperatures, which then can increase droughts and trigger biodiversity loss. So, while carbon credits are generally the most established option, purchasing a broader mix of environmental credits can help organizations reach sustainability goals faster and drive more meaningful impact.
Still, not all environmental credits are created equally. Quality can vary significantly, so make sure you’re buying credits from a reputable source. Consider factors such as third-party verification, registry tracking to avoid double-counting, and additionality, where the money from purchasing credits supports environmental action that wouldn’t otherwise take place.
Environmental product providers like Terrapass make it easy for buyers to fund a mix of high-quality carbon credit projects, as well as other types of credits like RECs and WRCs.
Businesses can also build a custom portfolio of environmental credits through Terrapass to align with your environmental footprint and corporate sustainability goals. Reach out today to see how you can make a more positive impact by funding different environmental projects.
frameworks, and support transparent, defensible climate claims as part of a long-term sustainability strategy.
