Shares vs. Credits

What are the differences between Carbon Shares and Carbon Credits?

Carbon Shares and Carbon Credits both represent an environmental claim that can be bought in the VCM. If they are high quality, they should also both follow the principles of additionality, durability, and measurability. Although this varies depending on the certification standard and project type.

Other than that there are a lot of differences between the two asset classes:

Accounting

The CO2e value of a Carbon Credit is always 1t of CO2e. It remains static regardless of how the underlying project performs.

Carbon Shares on the other hand can adjust their CO2e value dynamically depending on the amount of carbon stored in the underlying climate project. Consequently, the value could be anything from 0t to the maximum capacity per share.

--> Dynamic vs. static accounting of carbon claims

Project types

Because Carbon Shares have the ability to adjust their CO2e value they make the most sense with climate projects that aren't static in their carbon value. This is why Carbon Shares are ideal for nature-based solutions.

Carbon Credits can be found for all kinds of projects. In our opinion, they are a good choice when it comes to static climate solutions such as direct air capture (DAC).

Asset type

If you want to account the environmental claim of a Carbon Credit you have to retire it. After that the Credit becomes untradable. Therefore, they are a consumable which loses it's value as soon as it is retired (consumed).

Carbon Shares can't be retired. They are an intangible asset that can grow in value over time.