In this month's SlideShare we'll be covering the topic of carbon credits and carbon offsets and how these instruments are implemented to reduce carbon emissions to combat climate change. While the terms are often used interchangeably, carbon credits and carbon offsets does have certain key differences we'll be exploring. There are also important milestones to note, from the US Clean Air Act and Kyoto Protocol to UN Carbon Offset Platform. Over recent years, the carbon market value have grown significantly from EUR 186 billion in 2018 to EUR 850 billion in 2022.

1. Understanding the Way Forward Towards Reducing Emissions
For more info, contact us: xeraya@xeraya.com
Follow us: @xerayacapital
www.xeraya.com
Carbon Credits & Carbon Offsets
July 2023. © Xeraya Capital.
1

2. Carbon Credits & Carbon Offsets
Content Overview
• Defining Carbon Credits & Offsets
• Differences between Carbon
Credits vs Carbon Offsets
• Timeline of Emission Exchange
• Carbon Market Growth
• Global Snapshot & Key Players
July 2023. © Xeraya Capital.
2

3. Defining Carbon Credits & Offsets
A carbon offset is a reduction or
removal of emissions of carbon
dioxide (CO2) or other greenhouse
gases (GHG) in order to compensate
for emissions made elsewhere.
A carbon credit is a transferrable
financial instrument certified by
governments (or independent
certification bodies) to represent an
emission reduction that can then be
bought or sold by businesses.
Source: https://en.wikipedia.org/wiki/Carbon_offsets_and_credits
Credit: Climate Trade
July 2023. © Xeraya Capital.
3
One carbon offset or credit represents the reduction or
removal of one ton of CO2 or its equivalent in other
GHG.

4. Carbon Offset Projects
July 2023. © Xeraya Capital.
4
Source: https://www.techtarget.com/whatis/definition/carbon-offset
Plant Trees
Carbon
Capture
Remove &
Destroy
Pollutants
Renewable
Energy
Sustainable
Land Use

5. Carbon Credits & Offsets Simplified
July 2023. © Xeraya Capital.
5
Source: Davy.ie
Credit
Offset
1 Credit
=
1 ton CO2
equivalent
Offset has a more ‘open’ market,
accessible to companies, investors
and brokers
Credit is regulated by governments,
audited by regulatory bodies, sold to
industries that emit CO2

6. Key Differences
Interchangeable yet Different Approaches
Towards Offsetting Carbon Emissions
July 2023. © Xeraya Capital.
6

7. Carbon Credits vs Carbon Offsets: Key Differences
Carbon Credits
• Tradeable ‘permits’ to emit CO2
• Governments & regulatory bodies
create them to limit emissions by
a industry or sector (mandatory
cap-and-trade)
• Companies that emit less than
their allotted amount can sell
‘unused credits’ to companies that
emit more
• This creates a financial incentive
for companies to reduce their
emissions
Carbon Offsets
• Projects that reduce or remove
GHG from the atmosphere
• Projects include planting trees,
investing in renewable energy,
improving energy efficiency, etc.
• Carbon offsets are voluntary in
nature, and more accessible
• When you purchase a carbon
offset, you are essentially paying
for someone else to reduce
emissions
July 2023. © Xeraya Capital.
7 Source: https://www.constellation.com/energy-101/energy-
innovation/carbon-credit-vs-carbon-offset.html

8. Carbon Credits vs Carbon Offsets Compared
July 2023. © Xeraya Capital.
8
Source: Summarized by Google Bard
Carbon Credits Carbon Offsets
Tradable compliance certificates that represent
the right to emit one metric ton of CO2
Projects that reduce or remove greenhouse
gases from the atmosphere
Created by governments or regulatory bodies Created by anyone
Subject to strict verification standards No single set of verification standards
More regulated than carbon offsets Less regulated than carbon credits
More expensive than carbon offsets Less expensive than carbon credits
Less flexible than carbon offsets More flexible than carbon credits

9. Carbon Trade Milestones
Timeline of Emissions Trading &
Recent Market Growth
July 2023. © Xeraya Capital.
9

10. Brief History of Emissions Trading
July 2023. © Xeraya Capital.
10
Source: https://impactful.ninja/the-history-of-carbon-offsetting/
US Clean Air Act
1st medical diagnosis
over telephone – a child
was diagnosed with a
viral infection.
1977
1989-1990
Offset + Cap & Trade
Applied Energy Services
offset coal-fired plant to
fund agri-forest. Acid
Rain Trading Program
introduced afterwards.
Kyoto Protocol
Clean Development
Mechanism introduced,
expanded concept of
emissions trading.
1997
2005
EU Emissions Trading
Scheme (EU ETS)
The world's first international
emissions trading system,
inspired other countries to
follow suit.
Copenhagen Climate Change
Conference
Accord was drafted by the
US, China, India, Brazil and
South Africa; not adopted.
2009
2012-2015
SGD #13, Paris Agreement
Sustainable Development
Goal by UN to combat
climate change and impact.
Paris Agreement drafted by
end of 2015.
2023
Core Carbon Principles
Launched by independent
governance body (ICVCM)
to ensure best practices and
high-quality carbon credits.
UN Carbon Offset Platform
E-commerce platform where
anyone can purchase carbon
credits to offset emissions.
2020

11. 2018 2019 2020 2021 2022
186
240
288
760
850
The Carbon Market: Big Money
July 2023. © Xeraya Capital.
11
Source: Reuters & Statista
Value of the carbon market worldwide from 2018 to 2021
(in billion Euros)
European Union's Emissions Trading System (EU ETS),
is the world’s biggest carbon market. Worth around
751 billion euros in 2022, representing 87% of the
global total.

12. Global Carbon Market
Global Snapshot & Key Players
July 2023. © Xeraya Capital.
12

13. Global Carbon Market
July 2023. © Xeraya Capital.
13
Source: Reuters & Statista
North America’s carbon
markets: Western Climate
Initiative & Regional
Greenhouse Gas Initiative
- were worth >60 billion
euros combined in 2022
EU's Emissions Trading System (EU ETS) is the
world’s largest carbon market, est. 751 billion euros
in 2022, representing 87% of the global total
China’s emission cap
is based on emissions
intensity (not 1 ton
equivalent of CO2).
It was worth 504
million euros in 2022

14. Biggest Carbon Marketplaces
July 2023. © Xeraya Capital.
14
Source: https://carboncredits.com/the-top-4-carbon-exchanges-for-2023/
Launched in Singapore (2019) as a digital
exchange platform for airlines to trade
carbon credits (>130 organizations).
Earliest players (2009), member spot with
various participants. To date has traded
hundreds of million tons of CO2.
Toucan’s mission is to make DeFi
(decentralized finance) work by turning
Verified Carbon Units (VCUs) into crypto.
Hosting around 90% of all voluntary carbon
credit transactions worldwide, Xpansiv is
currently a dominant player in the market.
CORC marketplace is a site for companies to
purchase carbon credits from verified
projects.
Self-serve carbon marketplace with
portfolios of quality, verified registry carbon
offsets and third-party assessed removal
projects.

15. Malaysia’s Carbon Exchange
July 2023. © Xeraya Capital.
15
Bursa Carbon Exchange (BCX)
is Malaysia’s new voluntary
carbon market (VCM) exchange
that specializes in trading
carbon credits.
BCX offers a spot market where
carbon credits can be traded
immediately. Corporations may
purchase these credits to offset their
carbon footprint, or sell them to
finance initiatives aimed at reducing
carbon emissions.
Source: https://bcx.bursamalaysia.com/web
Credit: Above Creative Events

16. • Carbon credits and carbon offsets are both tools that can be
used to reduce greenhouse gas emissions. However, they are
different in a few ways.
• Carbon credits are tradeable emission permits created by
governments or other regulatory bodies, and they are subject
to strict verification standards. Carbon offsets, on the other
hand, can be created by anyone and is more accessible.
• Europe is currently the world’s biggest carbon market, with
the EU ETS is worth around 751 billion euros in 2022,
representing 87% of the global total.
Conclusion
July 2023. © Xeraya Capital.
16

17. By xeraya capital
For more info, contact us: xeraya@xeraya.com
Follow us: @xerayacapital
www.xeraya.com
July 2023. © Xeraya Capital.
17